Dana Gas, the Middle East’s largest regional natural gas company, has posted a net profit of $11 million for the first quarter (Q1) of the year, as against $6 million during Q1 2016,marking an increase of 83 per cent.

The company also reported gross revenue of $118 million during the quarter, up 44 per cent (Q1 2016: $82 million).

The uplift was due to increased production, principally in Egypt and higher realised prices. Overall group production was 69,900 barrel of oil equivalent per day (boepd), 16 per cent higher compared to Q1 2016. Average realised prices in Q1 were $42 per boe, versus $30 per boe in Q1 2016.

The company generated $27million in free cash flow in the first quarter, driven by a reduction in opex and capex and continued discipline on G&A expenditure. Opex was down 23 per cent due to further cost reductions in Egypt and capex was down 78 per cent as the Company focused on completing only those projects that were already in progress and those related to maintaining plant asset integrity and safe operations.

The company will continue adopting a prudent approach to spending as part of its effort to preserve cash resources, a statement said.

The current cash balance, as at 31 March 2017 was $298 million, down from $302 million at year-end 2016. In April the Company repaid the outstanding $60 million loan on the Zora Gas Field project principally to avert a covenant breach and avoid the negative carry.

In the first quarter 2017, collections in Egypt were $13 million, representing 42 per cent of total billings. Total trade receivables in Egypt increased to $283 million from $265 million as of December 31, 2016.

In Kurdistan, collections were $31 million, representing approximately 119 per cent of total billings. This was due to direct sales of liquid products to the local market and regular pro-rata payments against the $100 million Peremptory Order. Total receivable balance decreased marginally to $712 million. The company’s overall trade receivables were $1.0billion at the period end, up from $982 million as of December 31, 2016.

The Board of Directors recently requested an independent external consultant to review the overall maximum potential value of the Company and this was estimated to be in excess of $29 billion. These key assets include the Company’s resources and reserves in the KRI, Egypt and UAE as well as arbitration awards and pending damages claims. The Company is currently focused on short to medium term cash preservation to deliver this long-term potential.

Dr Patrick Allman-Ward, CEO, Dana Gas, said: “Our solid financial results are testament to our ongoing efforts at maximising production while reducing costs.  Group production was up for the second consecutive quarter, despite significantly reduced operating and capital expenditure. Further capital investment will be balanced with our collections.“

“Whilst we focus on short to medium term cash preservation, we remain excited about the potential for medium-term growth opportunities in Egypt and the development of our world class assets in Kurdistan over the medium to long term.

“Together with the potential damages claims from the arbitration cases the total value of Dana Gas’ assets are very significant. The Company needs time to realise this value, as well as collect on the circa $1 billion owed by the KRG and Egypt, for the benefit of all its stakeholders,” he added. – TradeArabia News Service