US firm IPR Energy has appeared as a front-runner for UAE firm Dana Gas’ Egypt assets, with the two companies locked in talks according to Reuters. Last September Dana put all of its Egypt assets on sale, looking to raise $500mn. But asset valuations have since headed south. In Egypt high natural decline rates – Dana CEO Patrick Allman-Ward says his firm’s Egypt assets have a natural decline rate of 20% – meaning that constant drilling, and thus spending, is needed to maintain output, leaving breakeven costs (presuming steady output) for many producers not far below current crude prices.
London-listed Pharos last week wrote down its Egypt assets to $60.5mn, versus the $207mn it paid last year (MEES, 28 August), though the slump in value at Dana’s gas-focused acreage should be less severe. Dana also recently announced that its two Egypt exploration blocks will be excluded from the sale (MEES, 28 August). (CONTINUED - 228 WORDS)
