Dana Gas revises 2016 results to loss due to unrealised interest

21/02/2017 07:37 AST

Dana Gas restated its 2016 earnings to show a loss after the UAE-based energy producer adjusted for a reduction in unrealised interest payments it had booked in its accounts. The company will post an $88mn loss for 2016 after reporting earlier this month that it earned net income of $33mn in the same period, it said in a stock exchange statement yesterday.

Dana Gas recorded a one-time reduction of $121mn in interest owed by the government of Iraq’s semi-autonomous Kurdish region after an arbitration tribunal ruling last week, according to the statement.

Oil and gas producers are cutting costs and earning smaller profits after crude fell from an average near $100 a barrel in 2014 amid a global supply glut. With oil averaging about $50 over the past two years, national budgets of producing countries are also coming under pressure, and some authorities are having trouble making payments they owe to companies. Dana Gas, which pumps most of its natural gas at fields in Egypt and Iraq, is seeking to recover overdue receivables from both countries as well as payments owed for current deliveries. The company and its partners in the Kurdish region of northern Iraq are in arbitration over losses and damages related to their operations there.

The tribunal hearing the Kurdish case ruled last week that Pearl Petroleum Co, the venture operating in Iraq’s Kurdish area, is entitled to less interest on overdue receivables than it was expecting, Dana Gas said in the statement.

To comply with the ruling, the company cut the amount of unrealised interest on its books to $67mn from $188mn. The reduction won’t affect its 2016 cash flow or cash balance, the company said.

Gulf Times