Dana Gas Request Egypt to Pay $24 Million

Dana Gas, the Middle East’s largest regional private sector natural gas company, on Friday appealed to the Egyptian Government to release $24 million from the outstanding $59 million receivables balance, which will be fully reinvested in the country.

It may be recalled that the Egyptian Parliament ratified the company’s new Concession Agreement in June this year, to consolidate existing producing concessions into a unified framework with improved terms.

Under this agreement, Dana Gas has committed to a significant development and exploration program, including drilling 11 wells, Dana Gas said in a regulatory filing with Abu Dhabi Securities Exchange (ADS) in the morning.

This work program, with a planned investment of approximately $100 million, is expected to increase production and add 80 billion cubic feet of gas reserves. These efforts will help offset natural declines in production and stabilize output over the coming years.

Additionally, the increased gas supply is projected to yield cost savings of over $1 billion for Egypt’s economy, reducing reliance on imported LNG and mazut for power generation, Dana Gas said.

However, for these investments to move forward, Dana Gas has requested that the Egyptian government release $24 million and without this payment, it will not be able to proceed with the first phase of the consolidation program. These funds are essential to support the enhancements needed to boost the country’s gas production capacity.

Dana Gas CEO Richard Hall said that they were currently focused on resolving issues around payments, which were preventing them from investing as per the new Concession Agreement. The company’s plans are ready to execute as soon as the receivables are paid down.

“As one of the earliest UAE investors in Egypt, Dana Gas has contributed over $2 billion to the country’s energy sector since 2007. We look forward to continuing this contribution and playing a key role in advancing Egypt’s energy security,” he added.

Financial Performance

Dana Gas, which has announced its financial results covering nine months to 30 September 2024, said that the revenue during this period stood at $286 million, a 12% decline from $326 million compared with the corresponding period in 2023, given lower realised prices in condensate and LPG segments.

The company generated a net profit of $112 million compared with $126 million in the first nine months of 2023, due to lower realised prices and production decline in Egypt. It also continued focus on driving cost and production optimisation, particularly in the KRI, minimised the financial impact of these challenges.

The company said that its balance sheet was strong through the successful reduction in debt by $78 million, bringing down the aggregate debt at the corporate level to $28 million.

Richard Hall said that the company’s strong financial performance demonstrated its operational excellence and resilience in a challenging environment of lower realized prices as well as a production decline in Egypt.

Looking ahead, they were working diligently towards resuming full construction activities on our KM250 project, and our focus remains firmly on delivering the first commercial gas by Q2 of 2026, he said.

“We have also reduced our corporate debt over the course of the first nine months, which continues to strengthen our balance sheet. As a result, the Company will evaluate the resumption of a sustainable annual dividend in March,” he added.

Liquidity

As of 30 September 2024, the company’s cash position stood at $151 million with $118 million held at the Pearl Petroleum joint venture.

Total collections during the first nine months amounted to $238 million, marking an increase from $167 million in 9M 2023. This includes $202 million from the KRI and $36 million from Egypt. The company received an $95 million dividend from Pearl Petroleum during the period.

Receivables in the KRI (Dana Gas share) stood at $69 million and at $59 million in Egypt by the end of Q3 2024.