Dana Gas, the United Arab Emirates energy firm, 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 now putting in place a new arrangement with the government that will permit it to invest in new Egyptian wells and redevelop existing wells, Allman-Ward told a conference call after the company announced second-quarter earnings.
This will result in increased production from Dana’s Egyptian operations; the company 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,” he said.
Dana has had problems recovering payments from exploration and production assets in Egypt and Iraq’s region of Kurdistan because of political turmoil in those countries.
At the end of June, the company was owed $297 million in Egypt, up from $274 million at the end of 2013, and $650 million in Kurdistan, up from $515 million, it said.