Dana Gas annual revenues grow to Dhs1.14bn

Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDAX) reflecting cash flows from operations in 2008 increased by twenty per cent during the year to reach Dhs575m. Net profit for the year was Dhs120m, an annual increase of 8%, after finance charges of Dhs263m, non-cash depreciation and depletion of Dhs301m and income tax expense of Dhs138m during the year. Long-term assets grew by 13.4% during the year to reach Dhs9.3bn, while total assets as at 31 December 2008 stood at Dhs10.8bn, all related to its core business and with no investments or exposure to financial or property markets. At the end of 2008, Dana Gas cash and bank balances stood at Dhs789m, demonstrating a solid liquidity position despite the current financial crisis.

Operationally, Dana Gas' oil and gas production in Egypt achieved a year end exit rate of 31,640 barrels of oil equivalent (boe) and ended the year with a total production of 10.6 million barrels of oil equivalent (mmboe), while significant new discoveries have more than doubled the Company's petroleum reserves in the country. In the Kurdistan Region of Iraq, gas production commenced in the fourth quarter at a gross rate of 80 million standard cubic feet per day (MMscfpd), leading to a 50% increase in total operated production for Dana Gas.

Hamid Jafar, Executive Chairman of Dana Gas, said:

"The year 2008 has been an excellent year for Dana Gas and we will continue to build on this important base in 2009, focusing as we always have on our core business area in the natural gas industry, which continues to show extremely strong fundamentals and growth opportunities, especially in our region in the Middle East, despite the slowdown in some other sectors."

"We are on target to increase our production by over 70% in the coming year, and the majority of our revenues are currently from fixed long-term contracts which also offers some protection from volatile oil prices. We will continue our strategy of making careful and sound investments in this vital strategic industry, to deliver solid growth for our shareholders while benefiting the countries in which we work," he added.

Ahmed Al-Arbeed, Dana Gas Upstream Executive Director, highlighted some of the key business achievements during the past year: "One of the most notable achievements for the year was the delivery of first gas within a record time of 15 months in our major project in the Kurdistan Region of Iraq with our partner Crescent Petroleum, which resulted in an increase of over 50% in our gross operated volumes. In Egypt, we pursued a successful drilling program which yielded multiple discoveries in different areas of our Egyptian concessions, significantly enhancing the Company's reserves with 362% reserves replacement, based on proved and probable reserves, for the year. In the UAE, Dana Gas completed its joint venture project with Emarat to own, manage and operate the Middle East's first common user pipeline and began implementation of the exploration and development programme of the Western Offshore concession in Emirate of Sharjah which includes the development of the Zora Gas field."

Mr Al-Arbeed continued, "In 2009 we will continue to implement our strategies for growth and expansion, focusing on capturing new opportunities through both acquisition and new project development. This year will Insha'Allah see the long awaited start up of the UAE Gas Project and fast track development of the Zora Gas Field in Sharjah, our production in the Kurdistan Region of Iraq will progressively increase to 300 million standard cubic feet per day, and work to bring our recent new discoveries in Egypt into production. We will also be continuing with further extensive developmental activities in all our projects."

At year end Dana Gas gross operated gas production from operations in Egypt and Kurdistan Region of Iraq reached 220 MMscfd, with total hydrocarbon production exceeding 40,000 barrels of oil equivalent (boe) per day.

In Egypt, new discoveries have significantly enhanced the Company's closing reserve position, and these were subject to independent professional evaluation, showing total (3P) reserves growing 82% to 157.7 million barrels of oil equivalent (MMBOE) as at 31 December 2008 (compared with 86.4 MMBOE a year earlier). The Company's 2P (proven plus probable) reserves replacement ratio was 362%, with 2P reserves addition of 41%.

Dana Gas Finance Director, Neeraj Agrawal, elaborated on the Company's financial results, "In the current financial and economic climate, Dana Gas has produced results that demonstrate solid growth and this reflects our focus on the strategic and expanding natural gas industry in our region. We successfully raised a $1bn at the end of 2007 by issue of our convertible sukuk and continue to maintain a healthy liquidity position, with no exposure to the market downturn in real estate or financial investments."

Mr. Agrawal added, "We entered 2009 with a cash and bank balance of Dhs789m which, along with the cash flow from operations in 2009, will facilitate the funding of our ongoing projects and servicing of the Sukuk."

In the Kurdistan Region of Iraq, Dana Gas and its partner Crescent Petroleum were able to complete the 180 km gas pipeline to transport gas from the Khor Mor field to the Erbil Power Station in late September. The initial processing facilities were successfully installed with gas deliveries to the Erbil Power Station commencing on 1 October 2008 via the 180 km pipeline. The main LPG plant construction is in progress and the first train is expected to be put into production at 150 MMscfd by end of Q2, 2009 and the second train for an additional 150 MMscfd is forecast to come on stream by Q3 2009.

In Egypt multiple significant discoveries were made in different areas of Dana Gas' concessions, which significantly increased the size of the Company's hydrocarbon reserves. The most recent discovery was made in West Qantara Concession, Salma-1, which is expected to add up to 230 billion cubic feet of gas reserves (38 MMBOE) plus condensates. This discovery is in addition to the earlier rich gas discoveries in El Basant-1 and 2 that have added up to 160 billion cubic feet of gas (27 MMBOE) plus condensates. This accumulation is being developed on a fast track basis back to the Company's existing facilities at El Wastani and will be commencing production during the first half of 2009.

The UAE Gas Project to process and transport imported gas is now in its final stages of completion. The construction and interconnection of the Company's facilities in the UAE have long been successfully completed and are awaiting the commencement of gas supplies. The ultimate supplier of gas, NIOC, has completed the installation of all the main components of the required upstream facilities in Iran. Commissioning of these upstream facilities is currently in progress for the commencement of gas supplies upon completion.