Dana Gas posts $83m FY profit

12/02/2018 05:33 AST

Dana Gas, the Middle East's largest regional natural gas company, reported full year 2017 gross revenue and net profit of $450 million and $83 million respectively as compared to $392 million and net loss of $88 million, respectively, in 2016.

In preliminary unaudited financial results for the full year ended December 31 2017, the company said the increase in revenue and profitability was due to the higher production in Egypt and the Kurdistan Region of Iraq (KRI) and an increase in realised liquid prices.

Net Profit was also supplemented by the successful settlement agreement with the Kurdistan Regional Government (KRG). However, in the 4th quarter, net profit was partly impacted by an impairment charge of $34 million against the UAE Zora asset following the year-end reserve report.

Total average 2017 production was higher by 1 per cent at 67,600 barrels of oil equivalent per day (boepd), from 67,050 boepd in 2016. The average realised liquid price was $40 per barrel of oil equivalent (boe), compared to $33 boe in 2016; a 21 per cent increase in 2017.

The company's year-end cash balance stood at $608 million, double the $302 million it reported at end of 2016. The cash balance was boosted by the $210 million dividend received from Pearl Petroleum Company Limited as part of the settlement, a $110 million industry payment in Egypt and $22 million of condensate export in Egypt partly offset by capex, G&A, loan repayments and finance costs. The cash balance does not include $140 million which is held by Pearl for investment in further developing the assets in the KRI.

The company's share of collections in the KRI stood at $466 million. Following the cash payment element of the Settlement and the reclassification of the residual receivables, the trade receivables balance stood at $7 million for the year-end and represents the amounts due against local sales for the month of December 2017. In Egypt, the Company collected $164 million, which was 129 per cent of billings. Consequently, total receivable balance fell to $228 million from $265 million, a 14 per cent drop.

The KRG Settlement saw Pearl (for which Dana Gas is a 35 per cent shareholder) settle a total of $2.239 billion debt due from KRG; including $ 1 billion received in cash upon settlement of which $400 million has been allocated for future investment to increase gas production at Khor Mor by 500 mmscfd.

The balance $1.239 billion was reclassified as petroleum cost recoverable by Pearl from future revenues. This settlement cleared all past receivables and allows Pearl to start the development of two world-class gas fields with in-place volumes of approximately 75 trillion cubic feet of wet gas and 7 billion bbls of oil, with plans under way to increase total production by 20 per cent this year and 170 per cent within 2 years. In addition, current production operations continue with regular payments continuing to be received.

Dana Gas expects to release its full year 2017 audited financial statements on March 15, 2018.

Trade Arabia