DANA GAS THIRD-QUARTER NET PROFIT UP 700% THANKS TO KRG SETTLEMENT

Quarterly revenues increase 6% year-on-year after payment agreed with consortium and following arbitration

Dana Gas, the Sharjah energy company, posted a 700 per cent increase in third-quarter net profit thanks to the favourable outcome of its arbitration dispute with the Kurdistan Regional Government (KRG) 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 a year earlier.

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, the Dana Gas chief executive.

Mr Allman-Ward said yesterday that the company aims 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, following the seizure of the Kirkuk region

We are very pleased with the outcome of the settlement agreement reached with the KRG which we believe is a real win-win outcome

PATRICK ALLMAN-WARD

Dana Gas CEO

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.

Mr Allman-Ward declined to answer questions on the $700m worth of Dana Gas sukuk that matured at the end of October.

The company has started legal proceedings in the United Kingdom and UAE to avoid redeeming the sukuk, which it claims are no longer Sharia- compliant.

Dana Gas “is pursuing the litigation route to resolve the matter and is confident pursuant to independent legal advice of prevailing in its interpretation of the outcome”, it said.

The British High Court judge George Leggatt said yesterday that he would not further adjourn a trial over the sukuk, and would be issuing a judgment soon.

Dana had asked for further postponement of the trial pending developments in a UAE court, where motions in the case have also been filed.

The company’s shares fell by as much as 4 per cent in early trading on the Abu Dhabi stock exchange yesterday, eventually settling unchanged at 73 fils.