UAE’s Dana Gas posts 85 per cent slump in profit

Second quarter drop came amid the slump in oil prices and lower production.

Profit at Sharjah-based Dana Gas tumbled by 85 per cent in the second quarter amid the slump in oil prices and lower production.

The Abu Dhabi-listed company’s net profit fell to Dh25 million compared with Dh169m over the same period last year. Revenues fell to Dh425m from Dh685m in the earlier period.

Dana Gas pointed to a “natural decline” in production from its Egyptian assets, which resulted in an overall 9 per cent drop in production levels over the year- earlier quarter.

Brent crude has fallen by more than half compared to last year’s peak of US$112 per barrel, which has affected profits for many oil and gas players as oil fell below $50 per barrel.

“Despite the steep fall in global oil prices over the past year and events in the region, Dana Gas has remained profitable and strengthened its operations with new investments,” said Patrick Allman-Ward, the chief executive of Dana Gas.

In June, the energy company started drilling two wells on Egypt’s onshore Nile Delta Balsam Development lease. This kicked off the first operations on the gas production enhancement agreement, a seven-year programme to drill 37 wells and conduct workovers on existing wells to increase production and help recoup outstanding payments.

The company said it received $49m towards overdue payments from the Egyptian government, taking payments to $246m. Dana said its Kurdish collections amounted to $17m, bringing receipts to $793m by the end of the second quarter.

Production at Dana Gas’s Kurdish assets increased by 4 per cent while the UAE’s Zora Gasfield project is expected to start producing this year.

“We are looking forward to additional production and cash generation in the second half of the year from our new investment programme in Egypt which is now under way, as well as from our Zora field in the UAE coming on stream,” said Mr Allman-Ward, adding that this should have positive results on future earnings.

Dana Gas shares closed unchanged at Dh0.58 in Abu Dhabi.

Follow The National's Business section on Twitter