Dana Gas looks to boost Iraq spend­ing as Egypt bids come in

The National - News - - BUSINESS - JEN­NIFER GNANA

Dana Gas, based in Sharjah, is look­ing to spend more in the Kur­dish re­gion of Iraq next year as it fi­nalises the sale of its Egyptian as­sets.

The company re­ported a near-dou­bling of cap­i­tal ex­pen­di­ture dur­ing the first nine months of the year of $123 mil­lion, up from $63m in the same pe­riod last year. Spend­ing in Egypt reached $70m, while $53m was al­lo­cated to the Kur­dish re­gion, where it is ramp­ing up gas pro­duc­tion.

“As we move for­ward to the ac­tual con­struc­tion phase of the first 250 mil­lion square feet per day [gas pro­cess­ing] train we will, of course, be ex­pect­ing and an­tic­i­pat­ing a sig­nif­i­cant in­crease in the amount of capex [cap­i­tal ex­pen­di­ture] next year,” Dana Gas chief ex­ec­u­tive Patrick All­man-Ward said in an earn­ings call on Thurs­day.

“This will be fully funded and will not re­sult in any cash call to Dana Gas.”

Dana Gas, through the Pearl Con­sor­tium, which op­er­ates its Kur­dish as­sets, is look­ing to ramp up pro­duc­tion of gas from the Khor Mor and Chem­chemal fields to about 880 mil­lion stan­dard cu­bic feet per day, with con­den­sate pro­duc­tion of 36,000 bar­rels per day by 2021. The company is also bring­ing two 250 mil­lion sf/d gas pro­cess­ing trains on stream to meet the ca­pac­ity in­crease.

Dana Gas re­ported an 87 per cent year-on-year drop in its third-quar­ter net profit to Dh8 mil­lion. Quarterly net profit was af­fected by im­pair­ment charges of Dh220m on the Merak-1 well in Egypt, which proved to be com­mer­cially un­vi­able, it said in a state­ment to the Abu Dhabi Se­cu­ri­ties Ex­change, where its shares trade.

Ex­clud­ing one-offs, the company re­ported flat net profit and rev­enue of Dh61m and Dh422m, re­spec­tively.

The company’s net profit for nine months more than tre­bled to reach Dh521m, largely on the back of Dh462m ac­crued from “recog­ni­tion of fi­nan­cial as­sets re­lated to cer­tain re­serve-based earnout and other en­ti­tle­ments,” it said.

Dana Gas will eval­u­ate bids for its Egyptian as­sets later this month, Mr All­man-Ward said, with pro­ceeds from the sale ex­pected to be ploughed into the Kur­dih re­gion, which holds 90 per cent of the company’s probable re­serves.

Italy’s Eni, which op­er­ates the mas­sive Zohr gas­field in Egypt is in­ter­ested in Dana Gas’s Egyptian as­sets but ac­qui­si­tions of those oper­a­tions was not a pri­or­ity for the en­ergy company, its chief ex­ec­u­tive Clau­dio Descalzi told Reuters this week.

Dana Gas, which had pre­vi­ously an­nounced its in­ten­tion to list on the Lon­don Stock Ex­change, is still ea­ger to pur­sue an ini­tial pub­lic of­fer­ing “in an al­ter­nate mar­ket”, Mr All­man-Ward said.

“The board has man­dated the management to look into that op­tion and we’re still study­ing that,” he said.

“In terms of tim­ing, it’s not the best of times his­tor­i­cally but we’ve seen ex­am­ples of list­ings that have been ex­tremely suc­cess­ful so there is in­deed op­por­tu­nity.”

As we move for­ward to the ac­tual con­struc­tion phase we will be an­tic­i­pat­ing a sig­nif­i­cant in­crease in the amount of capex next year


A Dana Gas fa­cil­ity in the Kur­dish re­gion of Iraq

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