Dana Gas receives $44m in dividends from Kurdistan operations in H1 2018

Dividends for condensate and LPG sales include a $7m payment received in June

Dana Gas said it received Dh271 million in condensate sales from the Kurdistan Regional Government.  WAM

Dana Gas received about $44 million (Dh161m) in dividends from Iraq's Kurdistan region in the first half of this year and expects its output from operations there to rise by 25 per cent in the third quarter of 2018.

Pearl Petroleum Company, a consortium of five energy firms, has made the dividend payment for condensate and LPG sales in the Iraqi region, Dana said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded. Total payments include $7m received by the energy producer in June, it said.

Dana, which holds a 35 per cent stake in Pearl and joint operator of the Kurdish fields, said plans to boost production by 170 per cent from Kurdish by 2021 are “on track”.

Dana swung to annual net profit of Dh304.8m in 2017 from a net loss of Dh323.1m a year ago following a Dh3.672bn payment as part of a settlement with the Kurdistan Regional Government.

The company’s main assets are in Egypt and Kurdistan, where it has struggled to collect receivables over the last few years. The energy firm reached a financial settlement in August, in which the Kurdistan government agreed to pay Dh2.2 billion to the Pearl Petroleum consortium and another Dh1.5bn to invest in the region’s development.

The Sharjah energy company has received all payments on time from Kurdistan without any outstanding receivables since the agreement in 2017, it said.

Dana’s net share of production in Kurdistan reached an average of 26,000 barrels of oil equivalent per day in the first half of 2018, slightly up from 25,900 in the same period last year. Plans to raise Pearl Petroleum’s production in three years will also increase its capacity to process gas and condensate from the
Khor Mor field.

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“The first phase of this expansion programme is the fast-track debottlenecking project of the current production facilities,” Dana said, adding that phase one will deliver an increase in output of approximately 25 per cent in the third quarter.

A drilling programme to appraise and develop Khor Mor and Chemchemal will take place over the coming months, Dana said.

The expansion will be financed at the Pearl Petroleum-level from third-party financing or internal cash flow generated without any finance provided by Dana Gas,
it added.

The company also signed a 10-year gas sales agreement with Kurdistan's regional government to supply and sell additional quantities of gas from the project.

Dana, which has been embroiled in a $700m sukuk dispute, last month secured the approval of the majority of its shareholders to move ahead with a sukuk-restructuring programme.