Dana Gas: Profits Up, Litigation Up, Zora Write-Down Looms

18 Aug 2017 Issue: 60 / 33

UAE firm Dana Gas this week reported a rise in profits and revenue for the first half of 2017 based on sharply higher oil prices, and lower capex, compared to the same period last year. But litigation is beginning to rival gas and oil production as Dana’s main line of business, with holders of the firm’s $700mn Sukuk recently added to its list of legal adversaries. The firm’s finances won’t be helped by a likely major write-down to its $100mn Zora gas development.

Output from the Zora Gas field 35km offshore Dana’s home emirate of Sharjah has fallen to just 10mn cfd, half year-ago levels. Dana added $100mn to its debt pile to fund development of Dora (MEES, 12 September 2014); at start-up less than 18 months ago it said output would ramp up to 40mn cfd (MEES, 3 March 2016).

Output is set to dwindle further. The firm has looked into the economics of a well intervention program to revive output but “preliminary results… indicate that at current gas prices… [this] is unlikely to be economically viable.” These results “will be taken into consideration” in a “final decision that will have to be taken on the asset” later this year, the firm said in its Q2 results, released 15 August. CEO Patrick Allman-Ward confirmed on the subsequent earnings call that a major write-down is the most likely outcome. (CONTINUED - 1158 WORDS)