Sea Dragon Adds To Egypt Oil And Gas Assets
Canada’s Sea Dragon Energy plans to add to its Egypt oil and gas assets via a $147.5mn purchase of National Petroleum Company Egypt (NPC Egypt) from Golden Crescent Investments. Golden Crescent is a unit of Cairo-based private equity firm Citadel Capital. The $147.5mn consists of $60mn in cash and 350mn shares of Sea Dragon, which will be issued to Golden Crescent at $0.25 per share. The move will more than double the Calgary-based company’s current reserves to 9.4mn barrels of proved plus probable crude reserves (light and medium grades) and hike its production by 65% to 650 b/d. The acquisition is expected to be finalized in the first quarter.
It will give Sea Dragon a 100% operating interest in three concessions, which comprise: SAZ in the Gulf of Suez (including the Muzhil field and SAZ-2 prospect); Shukheir Marine in the Gulf of Suez (including the Shukheir Bay and Gamma fields); and North El Maghara in North Sinai (NEM Concession). Also included in the purchase is a 12.75% non-operating working interest in South Ramadan concession, and rights to a 100% participating interest in a fifth, East Kheir, pending ratification of the concession award by the People’s Assembly of Egypt. The acquisition features existing production from the Shukheir Bay Area, and low risk development of the Muzhil oil field, which is forecast to produce 6,200 b/d when it comes on stream in the first quarter of 2013, said the company.
This year Sea Dragon expects to complete the installation of an offshore production platform and pipelines needed to bring first oil from the Muzhil field. Production wells will be tied in and brought on stream in 3Q13. The SAZ-2 prospect will also be tested with an exploration well planned for 2013. “This is a transformational transaction for the future of Sea Dragon and indicates the company’s commitment to grow in Egypt and elsewhere in the region,” commented Sea Dragon’s Chairman and CEO Said Arrata.
Sea Dragon’s current operations include the Northwest Gemsa concession 300km southeast of Cairo in the Eastern Desert, and Kom Ombo in Upper Egypt approximately 1,000km south of Cairo. NW Gemsa, in which Sea Dragon has a 10% working interest, has two main oil fields (al-Amir with al-Ola extension, and Geyad). Current production from al-Amir and Geyad is steady at around 7,500 b/d (750 b/d net to Sea Dragon). The Geyad wells include gas in addition to oil. Kom Ombo, in which Sea Dragon has a 50% working interest and is joint operator with Dana Gas, includes the al-Baraka field producing 620 b/d (310 b/d net to Sea Dragon). The company plans to drill further Kom Ombo wells, with the first to be spudded this month. Sea Dragon’s $75mn capex program for financial year 2012 and the first quarter of 2013 will include $12mn for existing assets and $60mn for the Muzhil field development.
IFC Considers Financing Sea Dragon
The World Bank’s International Finance Corporation (IFC), which focuses on private sector development, is considering investing $40mn in Sea Dragon, the company announced on 31 January. The IFC financing proposal consists of a $20mn investment in Sea Dragon common shares via private placement, and a $20mn loan. The proceeds of the IFC financing will be used to finance capital expenditure for existing assets and to finance the NPC Egypt purchase. The IFC financing is subject to Sea Dragon securing additional funding both for the NPC acquisition and future capital expenditure needs, and is subject to Canadian regulatory approvals – Sea Dragon is listed on the TSX Venture Exchange (TSX Venture: SDX). The IFC helps developing countries achieve sustainable growth and has other planned investments in Egypt, including in the $3.7bn Musturud refinery project which is being implemented by Citadel Capital (see page 2).
Copyright MEES 2012.
