Sharjah-based Dana Gas made a swing to profit in the fourth quarter as it received delayed payment from an operator in Kurdish Iraq.
It made a net profit of US$134.2 million for the fourth quarter from a net loss of $4m the same three months the previous year.
The out-of-court settlement with RWE, which involved the German group taking a 10 per cent stake in Pearl Petroleum, helped to offset declining cash flows incurred from overdue payments from the Kurdistan Regional Government (KRG).
Patrick Allman-Ward, Dana’s chief executive, said that last year was a difficult business environment for the industry.
Dana Gas cut its headcount by 40 per cent as a result of a continued lull in oil prices. “And the future continues to look challenging,” he said.
However, it aims to increase its production by nearly 10 per cent to hit 70,000 barrels of oil equivalent per day (boepd) this year.
Dana Gas increased its capital expenditures last year by 90 per cent, which included its assets in the UAE and Egypt. However, Egypt will be the only major investment for the upcoming year as the company pursues further development wells.
This falls under the alternative payment structure established with Egypt to allow Dana Gas the right to increase production to help recoup outstanding balances with a seven-year programme.
“Egypt remains core to our long-term plans despite market difficulties, and continued investment is required for us to continue to get paid,” Mr Allman-Ward said.
He said Dana Gas ended last year in a healthy position but it was conscious of the $777m of outstanding sukuk due for payment next year. “We are in a better position to ride out the oil price than we were this time last year,” he said.
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