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UAE FIRM HIT BY FALLING PROFITS

Dana Gas swings to Q3 loss on low oil prices

SHARJAH, November 15, 2015

UAE energy firm Dana Gas swung to a third-quarter loss on Sunday, hurt by erosion of hydrocarbon prices.

Dana reported a net loss of $9 million in the three months to September 30, from a profit of $38 million in the prior-year period, it said in a statement.

Dana Gas saw falling profits in the first and second quarters and a loss in the fourth quarter of 2014, hit by a slump in oil prices. Crude prices have dropped substantially since a June 2014 peak.

Announcing the results, Dana Gas said the extended period of low prices, which is affecting earnings across the sector, combined with a consistently challenging global economic environment, has resulted in the company reporting nine months 2015 gross revenues and net profit of $324 million and $10 million respectively, as compared to $541 million and $129 million in the same period 2014.

Average production in the third quarter was 60,800 barrels of oil equivalent per day (bpd), it added.

Commenting on the results, CEO Dr Patrick Allman-Ward, said: "The market remains extremely tough on producers but Dana Gas continues to be resilient and our focus on managing our cost base is yielding positive results. It has helped us to partially offset the low oil price environment and reduction in production to post a nine-month net profit of $10 million."

"In the Nile Delta, we are pleased to announce the outcome of two successful wells in the Balsam Development Lease. Both Balsam 2 and 3 wells had excellent results and initial estimates indicate a 2P reserve addition of about 165 Bcf, with a high condensate yield," he stated.

Allman-Ward pointed out that the Egyptian wells open up further development potential that will be pursued in 2016.

"We expect first production from the Balsam Field to come on stream before the end of the year. This is also the first gas resulting from our new investment program linked to the Gas Production Enhancement Agreement signed with the Egyptian government in August 2014. It represents a notable milestone as we start to add incremental production, generate additional revenues and reduce our outstanding receivables position," he added.

The UAE energy group reported a third quarter gross revenue of $93 million as compared to $174 million and an overall net loss of $9 million versus a net profit of $38 million in the third quarter 2014 principally due to lower prices but also to lower production.

The average realised price of condensate and LPG in the first nine months of 2015 was $53 and $37 respectively, a decline of approximately 50 per cent on 2014 prices.

Dana said the cash and bank balances, as of September 31, 2015, stood at $142 million, down 23 per cent compared to December 31, 2014, because of ongoing capital expenditures in Egypt related to the gas production enhancement agreement activities and the Zora project in the UAE, together with the regular Sukuk profit payments.

The cash collections from Egypt in the first nine months 2015 stood at $53 million and Kurdistan Region of Iraq (KRI) at $36 million. During the third quarter, the company realised $41 million from the sale of its shares of Hungarian oil firm MOL.

The company saw its share of production in the third quarter fall by 11 per cent to 60,800 bpd from 68,700 bpd, due primarily to natural declines in the Nile Delta fields in Egypt.-Reuters and TradeArabia News Service




Tags: UAE | Energy | Dana Gas |

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