Dubai: Lower gas prices and reduced production at its Egypt operation had a telling effect on ADX-listed Dana Gas' 9-month profit. The net profit for the period was Dh410 million ($112 million) against Dh462 million ($126m) a year ago.
When it comes to positives, the UAE headquartered company said 'continued focus on driving cost and production optimization, particularly in Kurdistan Region of Iraq, minimizes the financial impact of these challenges'.
Egypt update
On the Egypt operations, "We are focused on resolving issues around payments, which are preventing us from investing as per the new Concession Agreement," said Richard Hall, CEO of Dana Gas. "Our plans are ready to execute as soon as the receivables are paid down.
"As one of the earliest UAE investors in Egypt, Dana Gas has contributed over $2 billion to the country’s energy sector since 2007. We look forward to continuing this contribution and playing a key role in advancing Egypt’s energy security."
It was last June that Egypt's Parliament ratified Dana Gas' new Concession Agreement, which consolidates existing producing concessions into a unified framework with improved operational terms. Under the new deal, Dana Gas 'committed to a significant development and exploration program, including drilling 11 wells'.
This program entailed a planned investment of around $100 million, and which is expected to increase production and add 80 billion cubic feet of gas reserves.
"These efforts will help offset natural declines in production and stabilize output over the coming years," said a statement. Additionally, the increased gas supply is projected to yield cost savings of over $1billion for Egypt’s economy, reducing reliance on imported LNG and mazut for power generation."
What Dana Gas wants from Egypt
Dana Gas has requested the Egyptian government to release $24 million from the outstanding $59 million receivables balance, which will be 'fully reinvested in the country'. Without this, the company 'will not be able to proceed with the first phase of the consolidation program', it added.
"These funds are essential to support the enhancements needed to boost the country’s gas production capacity. The company is actively working with the Egyptian Natural Gas Holding Company (EGAS) to resolve this issue promptly, ensuring both parties can contribute in supporting Egypt’s energy objectives."
Pay down debts
Where Dana Gas scored was on curtailing its debt load by around Dh285 million ($78 million), thus bringing down the aggregate debt at the corporate level to Dh102 million ($28 million).
Dividend plans?
"We have reduced our corporate debt over the course of the first nine months, which continues to strengthen our balance-sheet," said Hall. "As a result, the company will evaluate the resumption of a sustainable annual dividend in March.”
