UAE’s Dana Gas reported a marginally higher second quarter net profit as the energy firm as its revenues rose and the cost of finance dropped.
The company made US$12 million net profit in the three months ending June 30, compared to $7 million the comparative period a year ago, according to a Dana Gas statement.
Gross revenues were $104 million, up from $96 million in 2016.
It made $23 million in the first half net profit, up from $13 million in the year-ago period.
Dana Gas said the gain was due to higher revenues (25 per cent), increased profit entitlement from Kurdistan Region of Iraq (KRG), as well as a 7 per cent drop in finance costs as the company settled Zora and other loans during the period.
The company recorded a 3 per cent jump in quarterly production of 37,650 billion oil equivalent per day (boepd) in the second quarter of 2017 compared to 36,550 boepd in the same period of 2016.
“We maintained strong production numbers by adding a further 13 per cent output in Egypt despite the planned shutdown of the El Wastani Gas Plant, which was completed successfully and without incident,” said Dr Patrick Allman-Ward, CEO, Dana Gas.
“Furthermore, we have plans to drill three exploration wells on Block 1 in Egypt in Q4 as part of our concession activity commitment. We remain excited about the potential for medium to long-term growth but also recognise the need to manage the short-term cash collection challenges until we recover affirmed receivables and thereby realise the enormous value of our assets," he added.
The company said it has started preparation work on the wholly-owned North El Salhiya (Block 1) concession for its drilling campaign in fourth quarter 2017. Three onshore wells will be drilled: North El Basant, ESAEN-1 and Bahy-2.
“Any exploration success and future production can be easily monetised through the existing infrastructure in place,” it said.
Work is also progressing for the North El Arish (Block 6) offshore concession in the Eastern Nile Delta, with drilling scheduled for early 2018.
Dana Gas’s production from UAE’s Zora gas field slipped to 1,700 boepd, from 2,300 boepd in the first half of the year.
Separately, Dana Gas said the final outcome of the ongoing litigations in UAE courts on its Islamic bond or sukuk, would likely result in a significant liability for the sukuk-holders to repay the company excess 'on account profit payments' based on a lawful reconciliation.
Earlier, Dana Gas said it had discovered its sukuk were illegal under under Islamic or shari’a principles because of "the evolution and continual development of Islamic financial instruments and their interpretation".
Dana Gas proposed swapping $700 million of outstanding Islamic bonds maturing in October for new sharia-compliant instruments with four-year maturities and profit distributions at less than half the rate of the existing instruments.
London’s High Court judge upheld an interim injunction blocking sukuk-holders from enforcing claims related to the securities, while he also restricted Dana gas from selling assets or raising more debt or paying dividends.
The companies said it is waiting for the final judgement in its case related to National Iranian Oil Company (NIOC) damage claims, expected towards the end of 2017 or first half of 2018.
NIOC and Dana's affiliate Crescent Petroleum signed a 25-year contract in 2001 for Iran to deliver gas to the UAE, with the price linked to oil. But deliveries were suspended as oil prices rose and some officials and politicians in Iran called for a revision to the gas pricing formula.
A UK arbitration tribunal gave a judgement against NIOC for breach of contract since December 2005, who challenged the jurisdiction of the arbitrators on the basis that the contract was unenforceable – specifically because it was secured by corrupt payments/bribery by Crescent Petroleum. The tribunal found no evidence of bribery, after which NIOC challenged the tribunal’s award in the High Court.