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Abu Dhabi, UAEThursday 19 July 2018

RAK Petroleum swings back to profit in 2017

The company ended 2017 with a net cash position of $30m compared with a net debt of $139m at the end of 2016

DNO, a RAK Petroleum Company operates the Kurdish fields of Tawke and Peshkabir. Ali Al Saadi / AFP
DNO, a RAK Petroleum Company operates the Kurdish fields of Tawke and Peshkabir. Ali Al Saadi / AFP

Ras Al Khaimah Petroleum, which operates oil and gas concessions in the Middle East and Africa, swung back into the black, reporting a net profit $54.8 million for the financial year 2017, compared with a net loss of $7.3m the year earlier, the company said in its financial statement.

The group, which owns stakes in Norwegian explorer DNO and in Africa-focussed oil and gas company Foxtrot International had a positive effect from a receivables settlement agreement, which caused the book value of DNO - the operator of Tawke concession in Iraqi Kurdistan - to increase by $556m, Bijan Mossavar-Rahmani, the company’s executive chairman of the board said in a statement.

DNO, which operates Peshkabir fields in Kurdistan, plans to spend $250m this year alone in the region, with plans for up to four wells. The operator aims to double production from the Peshkabir field alone to 30,000 barrels per day by summer, with output to be further boosted in the second half.

DNO said it received 12 monthly Kurdistan export payment in 2017 amounting to $380m (versus $202m in 2016) following the August deal, helping it to boost its cash flow. The company ended 2017 with a net cash position of $30m compared with a net debt of $139m at the end of 2016.

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Read more:

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In its latest financial statement, RAK Petroleum said that its stake in DNO had a market value of $506.7m based on quoted share price.

Total cash and cash equivalents of RAK Petroleum stood at $3.4m including its wholly-owned subsidiaries at $23.8m. Total bank debt came in at $30.6m and drawn from a lending arrangement with a UAE lender, the company said.

Net equity remained nearly flat at $669.1m compared with $625.5m for the financial year ending 2016.

The company’s ownership of DNO increased during the last financial year from 40.74 per cent to 41.80 per cent following the purchase of 27.3m additional treasury shares between March and July.

Foxtrot International, an explorer primary focused on Africa, saw a decline in net profit to $20.7m at the end of last year from $52.3m for the previous financial year, before accounting for depletion. Foxtrot, which accounts for nearly three-quarters of Cote d’Ivoire’s production of gas was affected by “non-cash adjustments to depreciation, depletion and amortisation of petroleum assets as well as the write-off of an exploration well,” the company said.