Dana Gas reported a flat net profit of $7 million in the second quarter of 2016.

The earnings lowered to $13 million from $19 million in thefirst half of 2016. The company had reported falling profits or a loss in five of the previous six quarters. Revenue dropped to $96 million from $116 million in the same period last year.

"The reduction was due to the decline in comparable hydrocarbon prices, which was offset by a combination of certain interest, reversals in provisions and a gain on the buy-back of the ordinary sukuk," Dana Gas said in a regulatory filing to ADX.

The company also received an $8 million contribution from the Zora field in the UAE and a revenue boost from incremental production during the quarter in Egypt. Average realised prices for condensates in the second quarter was $34 per barrel (bbl) and LPG was $27 barrel of oil equivalent (boe). This is compared to $59 bbl for condensates and $36 boe for LPG in the second quarter 2015 and $30 bbl and $29 boe respectively, in the first quarter 2016.

Group production in the second quarter of 2016 was 66,650 barrels of oil equivalent per day (boepd), up one per cent on Q2, 2015. In Egypt, Balsam Field added incremental production of 4,000 boepd. The Zora Gas Field, which came on stream in January, contributed 3,250 boepd to group production during the period.

For the first half of 2016, Dana Gas reported revenues of $178 million compared to $231 million in the same period in 2015, principally due to the sharp decline in hydrocarbon prices. The fall in revenues was balanced by lower G & A and operating costs as well as investment and finance income.

Dr Patrick Allman-Ward, CEO of Dana Gas, said: "We continue to make good progress with our operations by reducing costs and increasing production. Notable has been the increase in production from our Egyptian fields, which is now at the maximum capacity for the gas processing plant. We are currently drilling the deep Oligocene exploration well onshore Nile Delta and we anticipate that the well results will be known before year-end," the CEO said.

Dana Gas Egypt delivered average production of 36,550 boepd during the second quarter of 2016; an 11 per cent increase on the 33,000 boepd production in the first quarter 2016 and a four per cent increase on second quarter 2015. The Zora Gas Field has been in continuous production since February 28, 2016. In Q2, 2016 production was 295,750 boe or an average of 3,250 boepd.

On July 18, 2016, the English High Court finally dismissed the remaining grounds of appeal by the National Iranian Oil Company (Nioc) against the 2014 arbitration award. The 2014 arbitration award found in favour of Dana Gas' partner Crescent Petroleum Company International and Crescent Gas Corporation on five all issues. Nioc appealed the 2014 arbitration award to the English High Court. Most of the grounds of appeal were previously heard and dismissed by the Court in March 2016. The finalisation of the appeal in July 2016 confirms that the 2014 award is final and binding and that Nioc has been in breach of its gas supply obligations since 2005.

A final hearing to determine the damage claims against the Nioc for nonperformance of the contract has now been fixed by the Arbitration Tribunal for the 28 October 2016 in The Hague. Dana Gas said the London Court of Arbitration would hear remaining contractual issues related to Kurdistan and further damage claims from the consortium and counter-claims by the Kurdistan Regional Government in two hearings.

The first two-week hearing is set for September 5 and the other is expected to be in the fourth quarter or the first quarter of next year, Dana said. The company is also seeking damages from Nioc for alleged non-performance of a contract. -