Dana Gas plans more cost cuts due to low oil prices
UAE energy firm Dana Gas plans to cut costs in 2016 as the company gears up for a prolonged period of low crude prices, its CEO Patrick Allman-Ward said.
The Abu Dhabi-listed firm plans to cut general and administrative expenses by 55 percent in 2016 and operating expenses by a smaller amount, the CEO said.
“We need to prepare ourselves for the continued low oil price environment going forward,” Allman-Ward said.
Oil prices have fallen by more than half since a June 2014 peak.
Since the beginning of the year the firm has cut $5 million in costs by lowering general and administrative expenses, as well as reducing the workforce in the fourth quarter of this year, according to a company statement. Dana Gas reported a net loss of $9 million in the three months to Sept. 30, from a profit of $38 million in the prior-year period, it said in the statement.
Allman-Ward said the fourth quarter would be similarly challenging. A bright spot is Egypt, where the company expects production to increase significantly in 2016, he said. Dana expects initial production from the Balsam Field in the Nile Delta to come on stream before the end of the year.
The company recorded 32,144 barrels of oil equivalent per day in Egypt in the third quarter, a decline of 21 percent from the same period in 2014.
Allman-Ward also said he expected a judgment “imminently” on a legal dispute with Iraq’s Kurdistan Regional Government (KRG).
The company is one of the largest oil and gas investors in Iraq’s semi-autonomous Kurdish region.
On Sept. 21 it was among claimants that made an application to the London Court of International Arbitration Tribunal for a final monetary award against the Kurdish government for outstanding unpaid invoices for produced condensate and LPG.
Dana Gas saw falling profits in the first and second quarters and a loss in the fourth quarter of 2014, hit by a slump in oil prices. Crude prices have dropped substantially since a June 2014 peak.