- Production steady at 68,700 barrels of oil equivalent per day

- Positive revenues and profit numbers despite difficult sector conditions

- Kurdistan sales of LPG doubles year-on-year

- Zora Gas Field offshore platform complete; first gas production due mid-year 2015

5 May 2015

Sharjah

Dana Gas, the Middle East largest regional private sector natural gas Company today announced its financial results for the first quarter ended 31 March 2015.

First quarter 2015 group production remained strong, with the Company delivering an average of 68,700 barrels of oil equivalent per day ('boepd') from its assets in Egypt and in the Kurdistan Region of Iraq (KRI). Group production has remained stable on a year-on-year basis (Q1 2014: 68,800 boepd) and the Company continued to be profitable despite the significant fall in global energy prices, the difficult macroeconomic environment in Egypt and the unpredictable security environment in Iraq.

The Company delivered gross revenues of $ 115 million in the first quarter, although this represents a year on year decline (Q1 2014: US$ 180 million) due to the impact of lower hydrocarbon prices. Group earnings before interest, tax, depreciation and amortization were US$ 55 million (Q1 2014: $ 106 million). Similarly, net profit was positive but also lower at $12 million (Q1 2014: $ 45 million) mainly due to lower hydrocarbon prices.

The Company's average realized net price for the first quarter 2014 of condensate and LPG was $ 51 and $ 41 per boe respectively as opposed to $ 106 and $ 76 per boe in Q1 2014; in line with falling crude prices. The Company managed to partially offset the first quarter's lower hydrocarbon prices with a further reduction in G&A costs and lower royalty and tax charges.

As at 31 March 2015, the cash balance at $ 144 million was lower when compared to $ 184 million at the end of 2014. The reduction in the cash balance was due to expenditure linked to the remaining equity investments required for the Zora project together with the sukuk profit payment, whilst the Company received no additional payments from the KRG linked to the peremptory order issued by the LCIA in October 2014, and the $ 18 million cash advance for local sales of condensates made in September 2014 was unwound. The Zora project term loan achieved financial closure during the quarter with $ 29 million drawn down till 31 March 2015. Additionally, Dana Gas Egypt signed a financial lease with CorpLease for certain equipment (equipment lease tranche) for an amount of $ 12.2 million.

Dr Patrick Allman-Ward, Chief Executive Officer, commented:

"Dana Gas has maintained a high-level of production across our operations and has delivered positive revenue and profit numbers despite the steep fall in hydrocarbon prices, the difficult macroeconomic environment in Egypt and the unpredictable security environment in Iraq. Our operational success and financial stability can also be attributed to our continued focused approach to capital expenditure and our cost discipline. With the GPEA project in Egypt making progress, we are in good shape to not only sustain but markedly increase our production in Egypt in the medium term."

"Our Zora Gas Field project has completed the installation of the offshore platform and pre-commissioning work has already begun. This is an important milestone for Dana Gas as it plays into our long-term strategy of diversifying our producing assets base. It will also add an additional 6,650 boepd to Group production during the second half of the year."


Production and Development

Dana Gas's average quarterly net production from Egypt and KRI was 68,700 boepd (Q1 2014: 68,800 boepd).

Egypt

Dana Gas Egypt saw a total production of 37,700 boepd compared to 39,100 boepd in Q1 2014 due to the natural decline in gas wells. The GPEA has committed Dana Gas to a seven year staged, $350 million work program with 20 new development wells and 17 work-overs of existing wells. The Company will keep the proceeds from incremental liquid sales, which will be used to pay down the receivables owed by the Egyptian Government.

Kurdistan Region of Iraq

In the KRI, the Company saw its quarterly share of production (40%) in the Khor Mor Field marginally increase by 3.7% to 30,400 boepd (Q1 2014: 29,300 boepd) while LPG sales doubled year-on-year. The LPG plant is producing at near capacity having returned from suspension in July 2014 and sales have increased substantially as a result. The Company continues to sell its liquid hydrocarbon products domestically.

Zora Gas Project

Dana Gas has completed the installation of its platform jacket and offshore pipeline on the Zora Gas Field project. Pre-commissioning works have commenced and the fabrication of platform topside is in progress at Adyard's fabrication yard in Abu Dhabi. The drilling rig mobilized and commenced operations on the 8 April and other civil works are also under way. The field is expected to produce up to 6,650 boepd and first sales remain on track for mid-year 2015.

Arbitrations Update

With respect to the arbitration with the KRG, a one week hearing which started on 20th April 2015 at the London Court of Arbitration ('LCIA') considered selected issues in the arbitration, with a ruling expected later in the year. In the meantime the Claimants continue to pursue the peremptory award through the English High Court. Dana Gas reiterates its continued commitment to the Contract, the KRI and all of Iraq, and sincerely hopes that all outstanding contractual matters with the KRG can still be resolved, amicably and in good faith, within the contractual framework.

In December 2010, Dana Gas PJSC and Crescent Petroleum Company International Limited (the "Claimants") initiated arbitration proceedings before an arbitration tribunal in London alleging that RWEST (the "Respondent") had breached certain confidentiality agreements between the parties. On 10 March 2015, the Tribunal held that Respondent's breaches of the confidentiality agreements had harmed the Claimants' interests in the KRI. The quantum of damages will be heard and determined during a second quantum stage expected to commence during the second half of 2015.

With regards to UAE Gas Project, Dana Gas had previously informed the market that the Arbitration Tribunal had issued a Final Award on the merits, determining that the 25-year Contract for gas supply between the National Iranian Oil Company and Crescent Petroleum is valid and binding upon the parties, and that NIOC has been in breach of its obligations to deliver gas since December 2005. The damages quantification phase of the arbitration process has since commenced.

Receivables

The Company received a total of US$ 21 million of payments in Egypt, of which US$ 5 million was in cash and $16 million was offset to the government against a signature bonus for Block 1 and 3 and payables owed to government-owned contractors. As at 31 March 2015, total receivables stood at $ 1,027 million. Egypt and KRI's trade receivables are $ 243 million and $ 770 million respectively.

Finally, at the Company's AGM on 30th April 2015, shareholders elected a new, twelve member Board of Directors for a 3-year term. The new Board elected Mr. Hamid Dhia Jafar as Chairman and Mr. Rashid Al-Jarwan as Vice-Chairman.

-ENDS-

About Dana Gas

Dana Gas is the Middle East's first and largest regional private sector natural gas company established in December 2005 with a public listing on the Abu Dhabi Securities Exchange (ADX). It has exploration and production assets in Egypt, Kurdistan Region of Iraq (KRI) and UAE, with an average output of 68,900 boepd in 2014. With sizeable assets in Egypt, KRI and the UAE, and further plans for expansion, Dana Gas is aimed to play an important role in the rapidly growing natural gas sector of the Middle East, North Africa and South Asia (MENASA) region.

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