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