Dana Gas will review its 2017 investment plans for Egypt if the North African country doesn’t repay the full amount it owes the United Arab Emirates-based energy firm by the end of the year, its chief executive said on Wednesday.
Patrick Allman-Ward was speaking after the firm swung to a profit in the third quarter, halting a run of poor earnings performances, as it benefited from interest contributions on crude receivables from the Kurdistan region of Iraq.
Dana has been hamstrung in recent quarters as it awaits receivables owed in both Egypt and Iraqi Kurdistan, following political and economic turbulence in both places which have delayed payments.
As of Sept. 30, the amount owed by Egypt was $242 million, up from $221 million at the end of 2015. Dana’s share of owed receivables from the Kurdistan Regional Government was $722 million, down marginally on $727 million at the end of 2015.
However, Egypt is hoping to secure $12 billion in aid from the International Monetary Fund (IMF) as part of a series of bilateral fundraisings and economic reforms – most notably the free float of the Egyptian pound – aimed at revitalising its economy.
Part of the IMF loan will be distributed to the petroleum sector to meet outstanding debts, Allman-Ward told reporters on a conference call, citing conversations the firm had held with Egyptian officials.
“If it doesn’t happen (the payment), in keeping with our long-standing policy of balancing collections for investment, we would be forced to review how that balance can be maintained,” he said.
The payments issue is overshadowing a number of exploration developments in Egypt for the company. Its North El Arish Concession/Block 6 in the Eastern Nile Delta was an “exciting” prospect and the company was in talks with seven potential partners about a farm-out agreement, Allman-Ward said.
Production from Egypt in the third quarter rose to 40,000 barrels of oil equivalent per day (boepd), up 24 percent on the same period last year.
Dana made a net profit of $13 million in the three months to Sept. 30, compared with a loss of $9 million in the prior-year period, it said in a bourse statement.
It reported falling profits or a loss in five of the six quarters to March 31, hit by a slump in oil prices from their mid-2014 peak, before achieving flat profits in the second quarter.