UAE’s Dana Gas profit flat, bond gain help offset oil price decline

UAE-based energy firm Dana Gas said on Thursday it posted flat second-quarter profit as low oil and gas prices were partly offset by a gain on the buy-back of an Islamic bond.

Dana made a net profit of $7 million in the three months to June 30, the same as a year earlier. The company had reported falling profits or a loss in five of the previous six quarters.

Second-quarter revenue was $96 million, down from $116 million a year ago.

In a statement, Dana said the fall in oil and gas prices was offset by reversals in provisions and the $6 million gain on the Islamic bond, or sukuk.

Dana said it received $49 million for sales from Egypt in the first half of this year, bringing the total it is still owed from Cairo to $230 million.

Egypt delayed paying oil and gas firms as its economy deteriorated in the political turmoil that followed the fall of Hosni Mubarak in 2011.

Dana also collected $42 million from the Kurdistan Region of Iraq during the first half, bringing the total it is owed there to $726 million.

In 2007, Kurdistan awarded Dana and the UAE’s Crescent Petroleum a 25-year deal to develop the Khor Mor and Chemchamal gas fields. But the project became entangled in allegations that the consortium was underpaid for condensate and liquefied petroleum gas products supplied from Khor Mor.

Dana said on Thursday the London Court of Arbitration would hear remaining contractual issues related to Kurdistan and further damage claims from the consortium and counter-claims by the Kurdistan Regional Government in two hearings.

The first two-week hearing is set for Sept. 5 and the other is expected to be in the fourth quarter or the first quarter of next year, Dana said.

The company is also seeking damages from National Iranian Oil Co (NIOC) for alleged non-performance of a contract.

Dana Chief Executive Patrick Allman-Ward told a media conference call a final hearing to determine damage claims against NIOC had been fixed by an arbitration tribunal in The Hague for Oct. 28.

Dana’s capital spending, which was $80 million in the first half of 2016, will be cut in the second half, Allman-Ward said without elaborating.

The company has two Islamic bonds worth $700 million maturing in October 2017. With only $344 million in cash at the end of June 2016, Dana is considering options to refinance them, Chief Financial Officer Chris Hearne said without elaborating.

Source: Reuters