Dana said its South Abu El Naga-2 exploration well had struck a new rock formation containing gas and condensate, a type of extra-light crude oil. Preliminary estimates indicate the presence of more than 60 billion cubic feet of gas. Commercial production is expected to start before the end of the year.
"As our first discovery for 2011, the South Abu El Naga-2 well highlights our ongoing success in Egypt," said Ahmed al Arbeed, the chief executive of Dana.
The gas discovery is the 22nd the company has made since launching its exploration programme in 2007.
"The well is an excellent start for 2011. We still have a sizeable portfolio of drillable prospects and our exploration activity will continue throughout the year, as will our development activities. The discovery at the Naga-2 well represents a new era of shallow wells that can be drilled at low cost with fast production to meet Egypt's gas production demands," said Dr Hany Elsharkawi, the president of Dana Gas Egypt.
During tests, Dana's latest Nile Delta well produced 14.1 million cu ft of gas and 718 barrels of condensate a day. The new discovery is the second in the immediate vicinity.
Last year, Dana announced it had found an estimated 90 million cu ft of gas with condensates in the South Abu El Naga field.
Dana also produces gas from Iraqi Kurdistan and is developing a small gasfield offshore at Sharjah. But Egypt has provided the lion's share of the company's revenues to date. Dana now ranks as Egypt's 6th largest gas producer.