One-off sale staves off quarter loss for Dana Gas

A big one-off gain on the sale of a stake in its Kurdish gas venture has saved Dana Gas from posting a substantial second quarter loss. The company, which generates most of its revenue from gas production in Egypt, reported second quarter net income of Dh392 million (US$106.73m) , up more than 11-fold from Dh34m a year earlier, even as its revenue dipped to Dh303m from Dh309m. The company's profit in the latest quarter included a US$291m (Dh1.07 billion) gain on the sale to OMV of Austria and MOL of Hungary of a 10 per cent interest in Pearl Petroleum, a joint venture with Crescent Petroleum, which is based, like Dana, in Sharjah, to develop gasfields in Iraqi Kurdistan. Currently, the project partners are pumping just 80 million cubic feet a day of gas to supply local power plants, but they hope to expand Pearl's output in order to support significant gas exports to Europe. "Our numbers speak for themselves to the success of our operations," said Ahmed al Arbeed, the chief executive of Dana. "The second quarter of 2009 was marked by significant events for Dana Gas, particularly in the Kurdistan region of Iraq, where we entered into strategic partnership agreements with two leading central European integrated oil and gas groups." Without the Pearl transaction, Dana would have swung to a Dh675m loss in the second quarter. Its results for the period also included a $69m (Dh253m) charge for an impairment provision related to its long-delayed project with Crescent to import Iranian gas to the UAE. Crescent, which is Dana's biggest shareholder, recently said it would seek international arbitration on its contract with the National Iranian Oil Company (NIOC). The gas imports were supposed to start more than three years ago through an undersea pipeline that Crescent completed in 2006. Dana said in its second quarter financial statement that NIOC was still commissioning gas production facilities for completion during the second half of this year. While NIOC has dragged its feet over completing the facilities to pump gas from the Salman field in the Gulf, it has also pushed to renegotiate its supply contract with Crescent, resulting in a continuing dispute with Crescent over gas pricing. Iranian officials have threatened on several occasions to divert the gas promised to Crescent to Iran's domestic market, and NIOC has said it was close to completing a pipeline from Salman to the Iranian mainland. Dana had better news regarding Egypt, where it has raised its oil and gas output by 34 per cent since the second quarter of last year to 37,000 barrels of oil equivalent per day (boepd). The development of two recent gas discoveries should boost production to more than 40,000 boepd by the end of this year, the company said. It also disclosed a 10 per cent interest in a west African oil exploration venture. Its partner, Addax -Petroleum of Canada, has contracted a ship to drill the first of three planned wells off Sao Tome later this year. Addax is being acquired by Sinopec, a Chinese state-controlled oil company. tcarlisle@thenational.a