Production is not the problem for Dana Gas

Perhaps the only thing Dana Gas can be certain of right now is that production in Egypt, Iraq and the UAE is increasing.

The Islamic State has won its first victories against the Kurdish Peshmerga, which raises the prospect of violence drawing closer to Dana’s operations in Kor Mor.

The Kurdistan Regional Government, which has had its attempts to sell oil abroad prevented by American courts and the Iraqi oil ministry, is refusing to pay Dana Gas.

The KRG argues that it should not pay international prices for petroleum products – but Dana Gas has already assumed it will on its financials.

Arbitration is ongoing, and the outcome is uncertain.

Elsewhere, the Egyptian government is overdue on US$230 million of payments. Dana is hoping the government will display kindness towards its creditors in the summer.

Meanwhile, Dana Gas blew through US$70 million of cash in the previous quarter. The company has $132m in cash remaining, and $79m of saleable assets.

That is enough to last another nine months, given the company’s current cash flow.

It is not surprising that yields on Dana’s bonds have shot up as investors mull over the company’s predicament.

With overall production rising by 17 per cent, Dana is certainly good at producing gas. Its problem is that it is not so good at getting paid for it.

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