CI Capital says Dana new discovery to raise Egypt gas reserve by 2%

Dana Gas announced its latest gas discovery in Egypt’s Nile Delta, ‘South Abu El Naga-2’ well.

On test, the well produced 14.1 million standard cubic feet per day (MMscfpd) of gas with 718 barrels of condensate from the Abu Madi Formation, and 5.9 MMscfpd of dry gas. A preliminary estimate of the discovered reserves in the new pool (El Wastani formation) is in excess of 60 Bcf of gas, with a possible upside still under evaluation.

The well is expected to be tied to the company’s nearby South El Manzala gas processing plant before the end of 2011.Such discovery represents a new era of shallow wells that can be drilled at low cost with fast production to meet Egypt’s gas production demands.

CI Capital said that estimated reserves of the new discovery are expected to raise Egypt’s total reserve by 2% to 264 mn barrels of oil equivalent.

In 2010, Egypt continued to be the company’s cash cow generating 75% of its net revenues through escalating production; which surged by 22% to 42,300 boepd.

CI Capital set DANA LTFV at AED1.10/share and TP at AED1.01/share with Buy rating.