Dana Gas, a leading regional natural gas company, reported a net profit of $33 million for 2016.

The preliminary net profit was a decline as compared to $144 million achieved last year, which included gain on one-off sale of 5 per cent interest in Pearl and settlement from the RWE arbitration, the company said.

The net profit for the fourth quarter of last year was $7 million, the company said.

The gross revenues for the financial year and Q4 2016 were at $392 million and $112 million, respectively. The full year revenue saw a drop from $417 million in 2015 due to lower realised liquid prices despite the increase in the group annual average production, it said.

The company achieved an annual group average production growth of 5 per cent. Production in Egypt during Q4 production was up 31 per cent to 40,500 boepd, it said.
 
It also achieved continued successful cost reduction in 2016, with G&A down 43 per cent and Opex down 7 per cent. It had cash of $302 million despite disappointing collection in Egypt, the company said.

Dr Patrick Allman-Ward, CEO, Dana Gas, said: “We are pleased to report a strong operational performance in 2016 with total group production reaching 70,000 boepd in the fourth quarter. We have continued to improve significantly our margins by reducing overheads and operational expenditure. Unfortunately, we still face challenges around collections, which were disappointing in Egypt last year, and we must therefore balance further investment in the country with collections going forward. The situation around lack of payment in Egypt coupled with our sukuk maturity due at the end of October this year means that we must remain focussed on short-term cash preservation.

"Despite this backdrop, the medium term outlook for Dana Gas remains exciting. The company has material exploration upside in Egypt, world-class fields in Kurdistan to be developed and is making progress towards successful resolution on its arbitrations,” he said.

On a like-for-like basis, excluding the one off gain, the company continued to remain profitable in 2016 despite taking a charge on the currency devaluation in Egypt and a lower share of production from the KRI as a result of selling of 5 per cent share of equity to RWE, it said.

Total average 2016 production increased by 5 per cent to 67,050 barrels of oil equivalent per day (boepd), from 63,900 boepd in 2015. The average realised liquid price was $33 per barrel of oil equivalent (boe), compared to $45 boe in 2015.

Capital expenditure in 2016 was $122 million, with the majority of that capital being invested in Egypt. Going forwards, due to the challenges being faced around collections, the company will take a prudent approach of matching further capital investment in the country with collections, as part of the effort to preserve the company’s cash resources, it said.

The company’s year-end cash and bank balance stood at $302 million, down from $470 million at year-end 2015. Total collections for the full year 2016 were $200 million as compared to $168 million in 2015. Total trade receivables is $982 million, up from $950 million the year before. The cash balance decrease is primarily due to the repurchase of $50 million of Ordinary Sukuk, quarterly Sukuk payments and final capital payments for the Zora project in the UAE.

General and administrative expenses fell to $13 million in 2016 from $23 million in 2015, a 43 per cent drop, concluding a three-year cost reduction programme, which has led to a decrease of over 50 per cent in G&A costs.

The company is continuing to evaluate options to address the Sukuk maturing on October 31, 2017, it said.

Dana Gas Egypt recorded a drilling success rate of 92 per cent in 2016, increasing total output by 11 per cent to 37,600 boepd in 2016 compared to 33,900 boepd in 2015. Fourth quarter production rose by 31 per cent to 40,500 boepd from 30,900 boepd in Q4 2015.

The company has reached maximum plant capacity, having brought into production 12 new exploration and production wells. The high potential Block 3 Mocha-1 well in Egypt operated by BP is in the primary reservoir section and close to reaching target depth. Further logging and data analysis will be required to evaluate the results. - TradeArabia News Service