Dana Gas plans to cut costs in 2016 as the company gears up for a prolonged period of low crude prices, its chief executive said on Sunday.
The Abu Dhabi-listed firm plans to cut general and administrative expenses by 55 per cent in 2016 and operating expenses by a smaller amount, chief executive Patrick Allman-Ward said.
“We need to prepare ourselves for the continued low oil price environment going forward,” Mr Allman-Ward said on an earnings call.
Oil prices have fallen by more than half since a June 2014 peak.
Since the beginning of the year the firm has cut US$5 million in costs by lowering general and administrative expenses, as well as reducing the workforce in the fourth quarter of this year, according to a company statement on Sunday.
Dana Gas reported a net loss of $9m in the three months to September 30, from a profit of $38m in the prior-year period, it said in the statement.
Mr Allman-Ward said the fourth quarter would be similarly challenging.
A bright spot is Egypt, where the company expects production to increase significantly in 2016, he said. Dana expects initial production from the Balsam Field in the Nile Delta to come on stream before the end of the year.
The company recorded 32,144 barrels of oil equivalent per day in Egypt in the third quarter, a decline of 21 per cent from the same period in 2014.
Mr Allman-Ward also said he expected a judgment “imminently” on a legal dispute with Iraq’s Kurdistan Regional Government. The company is one of the largest oil and gas investors in Iraq’s semi-autonomous Kurdish region.
On September 21 it was among claimants that made an application to the London Court of International Arbitration Tribunal for a final monetary award against the Kurdish government for outstanding unpaid invoices for produced condensate and LPG.
Dana Gas saw falling profits in the first and second quarters and a loss in the fourth quarter of 2014, hit by a slump in oil prices. Crude prices have dropped substantially since a June 2014 peak.
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