Dana Gas, the Sharjah-based energy company, posted a 700 per cent increase in the third quarter net profit thanks to the favourable outcome of its arbitration dispute with the Kurdistan Regional Government (KGR) in August.
The company's net income rose to Dh375 million for the three months to the end of September 30, compared with Dh47m in the same period last year, it said in a statement on the Abu Dhabi stock exchange.
Revenues rose 6 per cent to Dh396m during the third quarter compared with Dh374m the same period last year.
The increase in profitability came as the company reversed its provision for payments to the KRG, following the agreement of a settlement with the company during the quarter.
Under the terms of the settlement, the KRG agreed to pay the Pearl Consortium — consisting of Dana Gas, its parent Crescent Petroleum, OMV of Austria, Germany's RWE and Hungary's MOL — a sum of US$600m, together with a $400m payment to be allocated towards the consortium's further investment in the region's gasfields.
The $1.24 billion balance of the amount awarded by the London Court of International Arbitration was reclassified as outstanding costs, recoverable from future revenues generated.
“We are very pleased with the outcome of the settlement agreement reached with the KRG which we believe is a real win-win outcome and an opportunity to start investing once again in our world class assets there and grow our production significantly in the short to medium term,” said Patrick Allman-Ward, Dana Gas's chief executive.
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Mr Allman-Ward told reporters on an earnings call on Monday that the company aimed to raise its condensate production in the region by 200,000 barrels per day, starting within the next two years.
He warned of increasing geopolitical uncertainty in the region, following the seizure of the Kirkuk region last month by Iraqi forces as a result of the KRG’s independence referendum, but said that production in the territory had been unaffected so far.
The company will “continue to keep our overall spending tightly managed,” in the face of the developments in Iraq, together with the sporadic payment of dues by the Egyptian government, he said.
The company’s shares fell by as much as 4 per cent in early trading on the Abu Dhabi stock exchange.