Dana Gas's financial health took another step towards recovery after the company announced it had received further payments for its natural gas in Egypt and the Kurdish region of Iraq, and that the refinancing of a US$920 million (Dh3.37 billion) Islamic bond was nearing completion.
The Sharjah-based gas producer said yesterday it had received at total of $73.7m from Egypt's government and the Kurdish Regional Government (KRG) since the beginning of the year, and that its shareholders and creditors would sign off the refinancing of its sukuk in the second quarter.
"Our strategy and efforts for addressing our receivables position in Egypt and the Kurdistan region of Iraq is yielding results," said Rashid Al Jarwan, Dana's acting chief executive. Dana was expecting "continued momentum in this process for the rest of the year".
The company said it was on schedule to complete the refinancing of the sukuk in the second quarter. A shareholder vote on restructuring the sukuk was postponed, after a meeting on March 24 failed to meet the required quorum.
It is optimistic that shareholders and creditors will sign off the new bond in two meetings to be held on April 23.
Dana was unable to repay the principal of its sukuk late last year, after long delays to payments because of the Arab Spring and a continuing dispute between the KRG in Erbil and Baghdad.
Dana received $41.3m from Cairo in January. The country's financial and political turmoil has resulted in it amassing huge debts with international oil and gas companies, and government finances are strained by high subsidies on electricity and cooking gas. Dana's output in Egypt is close to 200 million cubic feet of gas per day.
Payments stopped in the wake of the Arab Spring, and were resumed last year, with Dana receiving a total of $163m in 2012. The firm also received $32.4m from the KRG this year, the second recent payment after a $48m sum last December.
Erbil is at loggerheads with the central government in Baghdad over its energy resources, and the stand-off has reduced the flow of oil money into the autonomous region to a trickle.
Baghdad insists that the production contracts given to international oil companies by the KRG are illegal, and refuses to hand Kurdistan its share of oil revenues. But Baghdad did agree to a transfer of about $1bn last year, part of which was passed on to Dana. Exports of Kurdish oil through Iraq have been suspended, as further payments have not been forthcoming. Negotiations between the KRG and Turkey over direct exports are adding to the tensions between Erbil and Baghdad.
Regardless of payment issues, Dana is active in expanding its operations in both Iraq and Egypt, where it recently added two new wells. In Iraq, it is negotiating further production rights with the Kurdish government.
In addition, Dana is proceeding with a gas project in the UAE, and plans to appoint a construction contractor for the gas production facilities at the Zora offshore field by the end of the second quarter.
The company expects to produce about 60 million cubic feet of gas per day at the Sharjah field by 2014.
Buoyed by receivables out of Egypt and Kurdistan, Dana's net profit rose 20 per cent to $165m last year.
* With Reuters