Dana Gas reports strong results for Q1 2017

1 1 < < strong >strongstrong > >dana gas reports strong results forstrong >strongstrong > > Q1 2017 Sharjah, UAE; 11 May 2017: Dana Gas PJSC ( Company ), the Middle East s largest regional natural gas company, today announced its financial < < strong >strongstrong > >resultsstrong >strongstrong > > for the first quarter ended 31 March 2017. Highlights: - Q1 gross revenue was $118 million, up 44% (Q1 2016: $82 million) - Q1 net profit was $11m, up 83% (Q1 2016: $6 million) - Q1 average production was 69,900 boepd, up 16% (Q1 2016: 60,500 boepd) - Continued successful cost reduction with Q1 OPEX down 23% - Continuing challenges regarding collections in Egypt - Initiated Sukuk refinancing discussions - Positive arbitration outcomes regarding KRI Dr Patrick Allman-Ward, CEO, Dana Gas, said.

2 Our solid financial < < strong >strongstrong > >resultsstrong >strongstrong > > are testament to our ongoing efforts at maximising production while reducing costs. Group production was up for the second consecutive quarter, despite significantly reduced operating and capital expenditure. Further capital investment will be balanced with our collections. Whilst we focus on short to medium term cash preservation, we remain excited about the potential for medium-term growth opportunities in Egypt and the development of our world class assets in the Kurdistan Region of Iraq over the medium to long term.

3 Together with the potential damages claims from the arbitration cases the total value of Dana Gas assets are very significant. The Company needs time to realise this value, as well as collect on the circa $1 billion owed by the KRG and Egypt, for the benefit of all its stakeholders. Financial < < strong >strongstrong > >resultsstrong >strongstrong > > In the first quarter 2017, Dana Gas reported gross revenues of $118 million and net profit of $11 million as compared to revenue and net profit of $82 million and $6 million in the first quarter 2016. The uplift was due to increased production, principally in Egypt and higher realised prices.

4 Overall group production was 69,900 boepd, 16% higher compared to Q1 2016. Average realised prices in Q1 were $42 per boe, versus $30 per boe in Q1 2016. The Company generated $27 million in free cash flow in the first quarter, driven by a reduction in OPEX and CAPEX and continued discipline on G&A expenditure. OPEX was down 23% due to 2 further cost reductions in Egypt and CAPEX was down 78% as the Company focused on completing only those projects that were already in progress and those related to maintaining plant asset integrity and safe operations.

5 The Company will continue adopting a prudent approach to spending as part of its effort to preserve cash resources. The current cash balance, as at 31 March 2017 was $298 million, down from $302 million at year-end 2016. In April the Company repaid the outstanding $60 million loan on the Zora Gas Field project principally to avert a covenant breach and avoid the negative carry. In the first quarter 2017, collections in Egypt were $13 million, representing 42% of total billings. Total trade receivables in Egypt increased to $283 million from $265 million as of 31 December 2016.

6 In the Kurdistan Region of Iraq, collections were $31 million, representing approximately 119% of total billings. This was due to direct sales of liquid products to the local market and regular pro-rata payments against the $100 million Peremptory Order. Total receivable balance decreased marginally to $712 million. The Company s overall trade receivables were $ billion at the period end, up from $982 million as of 31 December 2016. The Board of Directors recently requested an independent external consultant to review the overall maximum potential value of the Company and this was estimated to be in excess of $29 billion.

7 These key assets include the Company s resources and reserves in the KRI, Egypt and UAE as well as arbitration awards and pending damages claims. The Company is currently focused on short to medium term cash preservation to deliver this long-term potential. Country Update Egypt Dana Gas Egypt s production was solid in Q1 2017. The onshore gas processing plant capacity at El Wastani remained at maximum output. Total output for the first quarter was 40,950 barrels of oil equivalent per day (boepd), a 24% increase on the 33,000 boepd output in Q1 2016.

8 The Company has significantly reduced its capital and operational expenditure plan for 2017, focussing on completing projects in progress or asset critical projects. In the second quarter 2017, the El Wastani plant is planned to be shut down either in full or in part for an estimated ten day period whilst work is carried out to improve plant performance and reliability. After the end of the first quarter 2017, the Company concluded the first international condensate sale in Egypt under the Gas Production Enhancement Agreement (GPEA).

9 The first cargo of approximately 150,000 barrels of Wastani condensate was loaded on 15 April 2017. The buyer issued a letter of credit under which payment amounting $ million will be paid directly to Dana Gas in US dollars. The cash proceeds generated from the Government s share of the incremental condensate sales will contribute to paying down the outstanding receivables owed to Dana Gas by the Egyptian Government. 3 Kurdistan Region of Iraq The Company s 35% share of gross production for the first quarter 2017 was 26,500 boepd up 4% on the 25,500 boepd in the first quarter 2016.

10 The Tribunal at the London Court of International Arbitration (LCIA) issued their third judgement dated 30 January 2017, ruling in the Claimant s favour regarding the most important of the issues under dispute, including complete dismissal of the KRG s counterclaims. Following this announcement, the KRG has requested the Consortium to execute appraisal work and submit development plans on the world-class fields of Khor Mor and Chemchemal. Furthermore, in agreement with the KRG s Ministry of Natural Resources, the Company has begun selling condensate directly to the government through the Jambour pipeline after it completed all its previously agreed local sales contracts, where it is spiked into the oil export stream to Ceyhan.