Dana Gas Strikes Gas, Condensate in Egypt's Nile Delta

Dana Gas has announced a significant gas and condensate discovery at its El Basant-2 well in the Nile Delta Concession in Egypt.

The El Basant-2 well, located 1.4 kilometers northeast of the El Basant-1 discovery in the West El Manzala Concession, was spudded on December 6, 2008, reaching a total depth of 3,050 meters and encountered 37 meters of net sand pay with good porosity and permeability in the Qawasim formation.

According to Dr. Hany Elsharkawi, Dana Gas country director in Egypt, the cumulative proven and probable reserves in the El Basant hydrocarbon accumulation significantly raises Dana Gas's reserves in Egypt, "We are very pleased and encouraged by this latest discovery. Combined with Dana Gas's other discoveries this year, it shows that our 2008 drilling campaign was correctly conceived and implemented and therefore on the basis of this success we plan to continue with further drilling in this concession, where several prospects of similar nature have been identified," said Dr. Elsharkawi.

"This acreage is particularly attractive to us as we have established production in the area and we are able to bring new discoveries on production quickly and at comparatively low cost. In addition our gas is sold at a fixed price and therefore our gas revenues have not been negatively affected by the recent drop in global oil prices. Dana Gas has already applied for a Development Lease, which we expect to be granted soon, and we anticipate a production start-up by the end of March 2009."

Following an extensive testing program at El Basant-2, Dana Gas plans to transport the hydrocarbons produced from the well through a pipeline to its El Wastani field facilities, which lie about ten kilometers to the north of the well.

Dana Gas is currently the sixth highest natural gas producer in Egypt, and has already made a number of discoveries in the country, including the first commercial oil discovery ever made in Southern Egypt. Dana Gas also has ongoing projects and assets in both the UAE and Northern Iraq, where the Company commenced gas production this past October in its major project in the Kurdistan Region, boosting Dana Gas operated production by over 50%. The company also successfully completed a US $1 billion sukuk offering in late 2007.

"Dana Gas ends 2008 with solid growth in production and activities and a positive outlook for the coming year, despite the global financial crisis," said Mr. Neeraj Agrawal, Dana Gas Finance Director. "Having completed our major fund-raising in late 2007, we are in a healthy cash position to fund project investments, and even the latest fall in global oil prices has not severely impacted our gas revenue generation given that 75% of our current revenues from Egypt come from gas sales at fixed prices. The fundamentals of the natural gas industry in the Middle East region remain strong, since it is a core long-term sector in the region's growth."