Dana Gas to recover overdue Egypt payments by 2018; chief executive

09/08/2014 08:08 AST

UAE energy firm Dana Gas expects to recover the vast majority of overdue payments which the Egyptian government owes it by 2018, group chief executive Patrick Allman-Ward said on Wednesday.

The company is putting in place a new arrangement with the government that will permit it to invest in new Egyptian wells and redevelop existing wells, Mr Allman-Ward said on a conference call following the company’s second-quarter earnings.

It posted a 70 per cent rise in net profit as production across the group rose. Dana made a net profit of Dh169 million versus Dh100m a year earlier.

The new arrangement in Egypt will result in increased production from Dana’s operations there. It will take all the additional condensate production and sell it on the international market, using revenues from those sales to pay down overdue receivables.

“The project will not deliver free cash until the second half of 2016 but thereafter will allow us to reduce the receivables to a nominal value by 2018,” Mr Allman-Ward said.

Dana has had problems recovering payments from exploration and production assets in Egypt and Iraqi Kurdistan because of political turmoil in those places.

At the end of June, the company was owed US$297m in Egypt, up from $274m at the end of 2013, and $650m in Kurdistan, up from $515m, it said.

Dana Gas also said it was expecting a payment by Egypt’s petroleum sector by September but did not provide an exact amount.

In Kurdistan, Dana reiterated that it had not received any significant payment since July 2013. The company said in July that a London tribunal had ordered the Kurdistan Regional Government (KRG) to restore previous regular payments as of March 21 until the case is concluded.

“Clearly we cannot be specific about other plans we have in place but the underlying fundamentals of the company are sound and we have increased production and increased revenues and profits,” Mr Allman-Ward said.

Revenues for the second quarter were Dh685m, up from 528m.

Dana said its average overall production volume was up 17 per cent to 72,200 barrels of oil equivalent per day.

The company’s operations in Kurdistan are continuing normally with no security threats so far, Mr Allman-Ward said.

“That production of gas and other products is used to power generation and that is key to keeping the lights on in Arbil and other cities in Kurdistan,” he said.

In the UAE, he said the Zora gas field is on time with first gas expected in the first half of 2015.

The National