Abu Dhabi: Sharjah-based Dana Gas posted a third-quarter loss on Sunday, citing the global drop in oil prices as the main factor.

Oil prices have been depressed this year due to both overproduction and weak demand. Since August, prices have averages below $50 (Dh184) a barrel.

The company posted an overall net loss of $9 million for the quarter, after posting a $7 million after-tax profit the previous quarter. Gross revenue for the quarter was $93 million compared to $174 million in the third quarter 2014.

“The market remains extremely tough on producers but Dana Gas continues to be resilient and our focus on managing our cost base is yielding positive results. It has helped us to partially offset the low oil price environment and reduction in production to post a nine-month net profit of $10 million,” said Dr Patrick Allman-Ward, CEO of Dana Gas.

Since the beginning of the year, Dana Gas said it has cut $5 million in costs by lowering general and administrative expenses. It is also planning to reduce its workforce in the fourth quarter of this year. It plans to cut general and administrative expenses by 55 per cent in 2016 and operating expenses by a smaller amount.

“We are trying to adapt to current environment of low prices by cutting costs and reducing workforce. Next quarter is going to be similarly challenging. We need to prepare ourselves for the continued low oil price environment going forward,” he said in a conference call.

The bright spot for the company has been the outcome of two successful wells in the Balsam Development Lease in Egypt.

Further development potential

Both Balsam 2 and 3 wells had excellent results with “proven and probable” reserves of about 165 billion cubic feet (Bcf), with a high condensate yield, Dr Patrick said.

According to him, the wells open up further development potential that will be pursued in 2016.

“We expect first production from the Balsam Field to come on stream before the end of the year,” he added.

Dana Gas Egypt has recorded 32,144 barrels of oil equivalent per day (boepd) of production over the third quarter of 2015, a decline of 21 per cent from an average of 40,500 boepd in the third quarter of 2014.

On Zora Gas field project in the UAE, Dana Gas said it continues to make progress. The last quarter has seen the well completed and cleaned up. First gas is due on-stream before year end.

On September 21, a one-day hearing was held during which the Claimants made an application to the London Court of International Arbitration for a final monetary award against the Kurdish government for outstanding unpaid invoices for produced condensate and LPG, the company said.