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Dana’s Q1 operating profit jumps 67% on output rise

Company’s share of overall production increased by 12%

Dana Gas, the Middle East’s largest regional private sector natural gas company, on Thursday said its first-quarter operating profits rose 67 per cent to to $45 million (Dh164 million) against $27 million (Dh98 million) in Q1 2013.

The company said this excludes the one-off gains of $39 million (Dh143 million) profits arising out of the partial sale of MOL shares in Q1 2013. Gross revenues achieved in Q1 2014 were $180 million (Dh660 million), 18 per cent higher than Q1 2013’s revenue of $152 million (Dh557 million). Increase in production (and sales) and tighter control of operational expenditure were the major contributors towards this rise in revenue and operating profit.

The company’s share of overall production for Q1 2014 increased by 12 per cent to register an average of 68,800 barrels of oil equivalent per day (boepd) as compared to 61,400 boepd in the same period last year. Dana Gas Egypt experienced a large upturn in average production to 39,100 boepd, a 17 per cent increase vis-à-vis the 33,400 boepd achieved in Q1 2013. In the KRI, the company’s share of production was also higher by six per cent to 29,300 boepd vis-à-vis 27,700 boepd in Q1 2013. In Q1 2014, the company received $3 million (Dh11 million) in Egypt and did not receive any payment from the Kurdistan Regional Government (‘KRG’). This resulted in trade receivables being higher by $68 million (Dh249 million) to $583 million (Dh2.14 billion) [FY2013: $515 million (Dh1.89 billion)]. As a result, the company’s cash balance was $155 million (Dh568 million) as at the end of the quarter. Egypt’s trade receivables stood at $278 million (Dh1.02 billion) following the offset of $37 million (Dh135 million) against the North Al Arish Offshore Block-6 signature bonus and amounts payable to government-owned contractors in Egypt. Total assets were unchanged at $3.53 billion (Dh12.9 billion).

As of April 30, 2014, the company has received voluntary conversion notices amounting to $65.4 million (Dh239.7 million), reflecting positive investor sentiment and helping the company lower its outstanding debt and cash outflow.

Dr Patrick Allman-Ward, chief executive officer, said: “We have made a solid operational start to the year and have delivered on our strategy of increasing output through organic growth, resulting in a 12 per cent increase in production output to 68,800 boepd. This reflects the quality of our assets in Egypt and the KRI and provides confidence for additional growth potential going 
forward. For the time being our capital expenditure will remain in-line with our collections. We are committed to further increasing production in Egypt and continue our discussions with the relevant authorities to resolve the matter of overdue receivables. In Kurdistan, we have increased production by six per cent through increased supply of LPG. The arbitration initiated by us and our consortium partners commenced in January 2014 with the successful formation of the Tribunal and proceedings are now ongoing. Regardless, we continue to operate our gas production facilities in Khor Mor at full capacity to provide the much needed power supply to the people of the Kurdistan Region of Iraq.”

Dana Gas’s average quarterly net production from Egypt and KRI was 68,800 boepd, a year-on-year increase of 12 per cent (Q1 2013: 61,400 boepd). The company has rationalised its Egyptian portfolio of assets, concentrating on its most commercial and long-term production growth opportunities in the Nile Delta and offshore Eastern Mediterranean. The process has seen Dana Gas complete major new field tie-in work, which together with maintenance and debottlenecking work in the El Wastani Plant, will increase output capacity by 25 per cent to 200mmscfd (an increase equivalent to 6,650 boepd) and contribute 10 per cent to overall group production. This has been a key factor in the country’s producing assets increasing their output to 39,100 boepd, a 17 per cent increase on its 33,400 boepd production in Q1 2013.

Dana Gas was also awarded a new Development Lease called Balsam following the discovery made in 2012, whilst simultaneously increasing its El Basant Development Lease (to cover the Allium discovery), jointly located in the West El Manzala Concession. It has also secured an increase to its Sama Developments in the West Al Qantara Concession to include the West Sama discovery.

Through Dana Gas’ comprehensive gas pipeline network and available processing plants, the Allium and West Sama discoveries have already been brought on-stream in a very short space of time.

As part of this rationalisation process, Dana Gas sold its entire 50 per cent holding in the Komombo concession to Mediterra Energy for $6.3 million in cash plus working capital adjustments.

— business@khaleejtimes.com