Dana Gas increases operated gas production by over 50 per cent

Project commencement and new discoveries creating solid platform
for further growth

Sharjah – November 4, 2008

Dana Gas, the Middle East's first and largest regional private-sector natural gas company, has today announced that its aggressive growth strategy, driven by a capital investment programme approaching $500 million, is delivering strong results. The gross operated gas production from operations in Egypt and the Kurdistan Region of Iraq has reached 220 million standard cubic feet per day (mmscfd), totalling more than 40,000 barrels of oil equivalent (boe) per day, an increase of over 50 per cent.

Commencement of production from a 75mmscfd early production facility began earlier last month in the Kurdistan Region of Iraq. Total gas production is expected to increase to 150mmscfd early next year, eventually reaching 300mmscfd in 2009, leading to a 200% increase on the Company’s current operated production in Egypt.

Earlier this month, Dana Gas announced a significant gas discovery at Al Tawil in the Nile Delta in Egypt which was production tested at a rate of 23.5 mmscfd of gas and 1,027 barrels of condensate per day (totalling approximately 5,000 boe per day). This discovery is particularly important as the well produced condensate at higher levels than existing producing wells and so will add materially to the Company’s overall liquid production in Egypt.

In the UAE, Dana Gas is moving ahead with plans for exploration and development of the Western Offshore concession in the Emirate of Sharjah, as part of a 25-year agreement with the Government of Sharjah. The concession agreement covers a total offshore area of over 1,000 square kilometres, and includes the development of the offshore Zora gas field in Sharjah by mid-2009.

The work programme will include the completion of horizontal drilling of two wells originally drilled by Crescent Petroleum, the installation of offshore platforms for immediate processing and production, and the transportation of the processed gas via 25km of offshore pipeline to be installed by Dana Gas.

Dana Gas General Manager Rashid Al Jarwan expressed pride in the significant achievements of the Dana Gas team: “We have delivered first gas in our project in the Kurdistan Region of Iraq just 15 months after commencement of operations there, and our production in Egypt is set for growth following the successful Al Tawil discovery, with the addition of UAE operations by next year,” said Mr. Al Jarwan. “The fundamentals of the natural gas business in our Middle East region remain very robust, with over 40% of the world’s reserves and fast-growing local demand as well, and Dana Gas is uniquely positioned to create value across the upstream, midstream and downstream gas sectors.”

Neeraj Agrawal, Chief Financial Officer of Dana Gas said that recent accomplishments by the company were indicative of its ability to deliver real and long-lasting shareholder value, particularly in the face of current challenges to financial markets.

“The business fundamentals of Dana Gas projects remain solid, in spite of the uncertainty which has cast a shadow over global financial markets lately,” said Mr Agrawal. “We continually monitor our capital investment plans to ensure that we remain in a position to invest in profitable projects whilst taking advantage of any market opportunities that may arise.”

Mr Agrawal further pointed out that Dana Gas raised its US$1 billion convertible Sukuk in October 2007 at a fixed profit rate with the Shari’a-compliant bond, leaving Dana Gas with a strong cash base for its operations, and that the Company had not suffered negatively from the recent global financial crisis. He also noted that the Company was protected from the recent fall in international oil prices as its revenues from gas sales were on fixed price long-term contracts.

Dana Gas press release