Dana Gas seeks to surpass 2008 achievements

Dana Gas Executive Chairman, Hamid Dhiya Jafar, told those in attendance that the Group is in excellent financial health and will continue to expand its operations as it has done since inception.

In line with its robust five year business plan and entry strategies within the MENASA Region, Corporate Guidelines were developed to exceed regional best-practice and meet international best-in-class standards. The company opened a new Head Office in Sharjah and increased its staff to about 500 in order to meet its ongoing and expanding operations.

In his report to the AGM, on behalf of the Board of Directors, Mr Jafar highlighted the company's achievements for the past year saying, "We have had an excellent year. The Company has become an important and highly visible player in the emerging energy infrastructure of the MENASA Region. Our focus remains unchanged from when we began three and a half years ago: to be a force for change as the region's premier private sector natural gas company."

Some of the achievements highlighted by Mr Jafar include achieving a year-end exit rate of 31,640 barrels of oil equivalent (boe) per day with a total annual production of 10.5 million barrels of oil equivalent (mmboe) in its Egypt operations, while its total (3P) petroleum reserves in Egypt increased by 84% from 86 mmboe in 2007 to 158 mmboe in 2008. Dana Gas also made five consecutive exploration discoveries in the company's Nile Delta Concessions, one of which is now in production.

The discoveries included Salma-1 in the West Qantara Concession, El Basant-1 and El Basant-2, and doubled Dana Gas's Egypt reserves. In addition, the Ras Shukeir LPG recovery plant project - being carried out by an affiliate company, Danagaz, along with partners EGAS and APICORP - is currently under development on the Red Sea Coast, and is due for completion and production in late 2010.

Production on the project in the Kurdistan Region of Iraq - which involved the rehabilitation of a giant gas field, installation of new state-of-the-art production and gas processing facilities, and the construction of a 180 kilometer high-pressure gas pipeline to a newly constructed power station at Erbil to supply much needed electricity to the region - commenced in a world record time of just 15 months after implementation, and is set to treble to 300MMscfd in 2009, in addition to a significant quantity of petroleum liquids.

The Kurdistan Gas City project was officially assigned a 461 million square foot site near Chemchemal by the Kurdistan Region Government, and Dana Gas is also making good progress with the Egyptian authorities to establish the Egypt Gas City.

Closer to home, Mr Jafar said the company was able to report positive progress on the UAE Gas Project, which involves the import of gas by the company's partner, Crescent Petroleum, from the National Iranian Oil Company (NIOC) for processing and transportation and joint marketing by Dana Gas within the UAE. NIOC has completed constructing its upstream infrastructure in Iran, and has appointed a French contractor, IPEDEX, to complete its commissioning work.

Dana Gas's facilities are ready to receive the gas as soon NIOC's work is completed. Dana Gas also completed its joint venture project with Emarat to own, manage and operate the Middle East's first common user gas pipeline, which is already in operation, while the Zora Gas Field offshore Sharjah marks the company's entry into the GCC upstream sector, with production from the project underpinned by a 25-year concession and expected to supply the domestic market from 2010.

Dana Gas ended the year in a healthy financial position, with revenues up 10% from 2007 to Dhs1.14bn, cash from operations up 20% to Dhs575m, and an 8% increase in net profit, which was up to Dhs120m. The company also invested over Dhs1bn in assets that will deliver robust growth for its shareholders.

Speaking of the growth plans and outlook for Dana Gas for the coming year, Mr Jafar said, "The natural gas sector continues to show extremely strong fundamentals despite the global recession. The MENASA Region is unquestionably the world's largest player in hydrocarbon supply, with 45% of global gas reserves yet less than 20% of its supply. Additionally, the robust economic growth in recent years has transformed the Region into a major gas market in its own right with an estimated long term annual growth rate of between 6-7%. This positive long-term view of our industry has been enshrined in our robust five year business plan and entry strategies within our Region."

He added that raising new sources of finance is now more challenging from both a resource and cost perspective, and that cash earnings are best retained for investments in support of the Company's continuing growth and enhancing shareholder value. Mr Jafar concluded by stating, "Our goals for 2009 are to reach even greater heights than in 2008; they will undoubtedly be challenging, but we nevertheless look forward to achieving them."

Shareholders at the AGM approved the audited accounts and the auditor's report for the period ended December 31 2008. Ernst & Young were also reappointed as auditors to the company.