Unpaid dues from Egypt, Kurdistan hit UAE's Dana Gas profits, investment plans

Published February 12th, 2017 - 09:00 GMT
Dana Gas reported a full year revenue of $392 million as compared to $417 million in 2015. (Shutterstock)
Dana Gas reported a full year revenue of $392 million as compared to $417 million in 2015. (Shutterstock)

Dana Gas, posted a $33 million (Dh121.11 million) profit for full year 2016, nearly four times lower than full year profit of $144 million in 2015, according to a company statement on Thursday.

The UAE energy company reported 2016 fourth-quarter profit of $7 million compared to $134.2 million in the fourth quarter of 2015.

The profit was lower due to a gain on one-off sale of 5 per cent interest in Pearl and settlement from the RWE arbitration in 2015, Dana Gas said.

Dana Gas CEO Dr Patrick Allman-Ward said the company continued to improve its margins significantly by reducing overheads and operational expenditure.

“Unfortunately, we still face challenges around collections, which were disappointing in Egypt last year, and we must therefore balance further investment in the country with collections going forward. The situation around lack of payment in Egypt coupled with our sukuk maturity due at the end of October this year means that we must remain focused on short-term cash preservation.”

The company reported full year revenue of $392 million as compared to $417 million in 2015. The drop in revenue was due to lower realised liquid prices despite the increase in the group annual average production.

Total average 2016 production increased by 5 per cent to 67,050 barrels of oil equivalent per day (boepd), from 63,900 boepd in 2015.

Dana has also been facing problems in recent quarters as it awaits receivables owed in both Egypt and the Kurdistan region of Iraq.

In Egypt, collections for the full year 2016 were $79 million, representing 64 per cent of total billings. In Kurdistan, collections for the full year 2016 was $101 million, representing 129 per cent of total billings.

In a conference call, Allman-Ward said the company will not make any new investments in Egypt due to delay in receiving payments from the Egyptian government.

“Not having been paid and having had our receivables position increase means, we are simply not able to continue our capital investments programmes in Egypt. We are going to finish our health, safety, security and environment areas of critical projects and also all projects currently under execution. We are not going to executive new projects.”

He, however said they will review and revise that position as and when a payment is made by the Egyptian government.

“Our desire is to continue to develop our assets in the country that are beneficial to Egypt as well as Dana.”

In the UAE gas project, a final hearing to determine the damage claims against the NIOC (National Iranian Oil Company) for non-performance of the contract took place in The Hague on 3 November 2016, the company said.

A judgement is expected this year. This damage phase follows the first phase of the arbitration which was decided by the Tribunal’s award issued in 2014 which confirmed the validity of the 25-year gas supply contract between NIOC and the UAE based Crescent Petroleum.

By Fareed Rahman

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