Dana Petroleum to buy Devon's Egyptian assets

British Dana Petroleum (E&P) Ltd. has signed an agreement to buy all of Devon Energy Corp.'s upstream assets in Egypt's Gulf of Suez and Western Desert oil regions for $375 million.

Uchenna Izundu
International Editor

LONDON, Apr. 26 -- British Dana Petroleum (E&P) Ltd. has signed an agreement to buy all of Devon Energy Corp.'s upstream assets in Egypt's Gulf of Suez and Western Desert oil regions for $375 million. With the transaction Dana will add 12,300 b/d of production and 30 million bbl of proved and probable reserves on a working interest basis.

The parties hope to close the deal by the third quarter.

Dana will acquire Devon's interests in eight companies and eight production-sharing contracts as well as $67 million of working capital in Devon Egypt. Four of the PSCs are under development, with 13 fields producing oil and gas. The fifth PSC has both development and exploration opportunities, and the remaining three are in an earlier exploration stage.

The assets
In the Gulf of Suez Dana will become operator of East Zeit oil field, which produces 6,600 b/d of oil on average, and will acquire Devon's 50% interest in the joint operating company, Ocean East Zeit Petroleum Ltd., which also operates the onshore Zeitco base and provides services to other third party fields in the area.

Dana picked up various exploration PSCs in the gulf: a 100% interest in the onshore North Zeit Bay concession; 65% of the offshore South October PSC that adjoins large existing fields and has exploration drilling planned for 2008; and 100% in the offshore Ras Abu Daraq PSC.

Four assets are in the Western Desert:

-- A 30% interest in the West Abu Gharadig PSC, which contains Raml and Raml SW fields operated by Eni SPA unit IEOC.

-- A 25% interest in Apache-operated Qarun PSC, which contains four fields that produced 9,445 b/d gross in 2006.

-- A 50% interest in Apache-operated East Beni Suef PSC, containing five producing fields and an underexplored area.

-- A 50% interest in the North Qarun exploration concession, which Dana will operate.

Work program
Dana will start on four infill drilling opportunities out of the nine that Devon has identified on its operated East Zeit field to raise production from 6,000 b/d to over 15,000 b/d. Dana will examine optimizing the use of artificial lift pumps on existing wells.

Additional infill drilling targets may also emerge once Dana shoots a seismic survey on the West Abu Gharadig block and interprets new 3D seismic data acquired in the East Beni Suef concession.

Dana has identified at least 24 prospects on its Egyptian acreage and will look at exploring the Ras Abu Darag and South October concessions, both in the Gulf of Suez, after it interprets 3D seismic data. In North Qarun, in the Western Desert, a well is planned for this year, with further prospects identified.

Devon Energy sold the assets because it wants to concentrate on growth opportunities in North America and exploration in Brazil and China. Devon Energy is also selling all of its West African assets and hopes to receive bids on those properties by early July.

Contact Uchenna Izundu at uchennai@pennwell.com.

More in General Interest