Lower hydrocarbon prices weigh on Dana Gas profit

Dana Gas reports Dh462 million net profit in first nine months of 2023

By WAM

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In the Kurdistan Region of Iraq (KRI), Dana Gas has continued to sell to third party local buyers in what is a competitive market. — WAM file
In the Kurdistan Region of Iraq (KRI), Dana Gas has continued to sell to third party local buyers in what is a competitive market. — WAM file

Published: Wed 8 Nov 2023, 8:40 PM

Dana Gas PJSC on Wednesday announced that it generated a net profit of Dh462 million ($126 million) for the nine months ended 30 September 2023, as compared to Dh589 million ($161 million) in the first nine months of 2022.

In the first nine months of the year, Dana Gas’ profitability dropped 22 per cent due to lower realised prices amid a decline in hydrocarbon prices in international markets.

The decline in profitability was also due to additional discounts on condensate sales in the Kurdistan Region of Iraq (KRI), where the company has continued to sell to third party local buyers in what is a competitive market as a result of the export pipeline closure earlier this year.

The company’s revenue for the first nine months of the year decreased 21 per cent to Dh1.195 billion compared to Dh1.521 billion in the first nine months of 2022. The company’s realised prices during the period averaged $53 per barrel for condensate and $36 per barrel of oil equivalent for LPG compared to $85 per barrel and $43 per barrel of oil equivalent respectively in the first nine months of 2022. The impact of lower realized prices on the company’s profitability was partially offset by a production increase in the KRI and reduced operating costs.

Richard Hall, the newly-appointed CEO of Dana Gas, commented: “Dana Gas has demonstrated remarkable resilience in its performance throughout the first nine months of the year. Our proactive measures implemented over the past few years, such as cost reductions and production optimisation, have yielded clear operational and financial benefits and helped to offset lower hydrocarbon prices. Dana Gas will also continue to work closely with our government partners in Egypt and the KRI to ensure timely settlement of all outstanding receivables.”

The group’s overall production in the first nine months of 2023 was 59,750 per barrel of oil equivalent per day (boepd), a 1 per cent reduction from 60,600 in the first nine months of 2022. This was due to a 14 per cent production drop in Egypt, mainly as a result of natural field declines. Due to proactive reservoir management and effective optimisation of existing wells, this decline was notably less than the typical annual declines of 20-30 per cent typical of the Nile Delta fields.

Production output in the KRI increased 8 per cent with production averaging 37,150 boepd in the first nine months of 2023 versus 34,300 in the first nine months of 2022. KRI production was supported by the successful debottlenecking project carried out in the second half of 2022. Pearl Petroleum has now successfully completed the drilling of the six KM250 project development wells. Once complete, the KM250 expansion project will add 250 million standard cubic feet per day of production, resulting in 750 mmscf total daily production capacity.

The company said it remains committed to improving energy efficiency and reducing greenhouse gas emissions across all operations, such as reducing flaring and methane leakage. Over the past three years, Dana Gas has achieved a 47 per cent reduction in flaring, coupled with a 26 per cent reduction in total GHG emissions since 2019. Furthermore, the company proudly aligns itself with the aiming for zero methane emissions initiative, an industry endeavour spearheaded by the Oil and Gas Climate Initiative (OGCI). As a signatory, Dana Gas is aiming to eliminate methane emissions from its operations by 2030.


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