Thu 14-11-2019 12:07 PM
SHARJAH, 14th November, 2019 (WAM) -- Dana Gas, a private sector natural gas company, today announced its financial results for the first nine months ended 30th September, 2019. The company’s net profit jumped 246 percent to US$142 million (AED521 m) in 9 months 2019 compared to US$41 million (AED149 m) in 9 months 2018.
This increase was mainly due to higher other income amounting to $126 million (AED462 m) resulting from recognition of financial assets related to certain reserve-based earn-out and other entitlements, said a press release issued by Dana Gas on Thursday.
The increase was partially offset by a $60 million (AED220 m) impairment provision in relation to the Merak-1 well in Egypt which was drilled in Q3 but did not encounter commercial hydrocarbons.
Excluding the increase in other income and the impairment provision, net profit from core operations increased by 85 percent to $76 million (AED279 m) versus $41 million (AED149 m) in 9 months 2018. This was principally due to an increase in production in Kurdistan Region of Iraq, KRI, post successful completion of the debottlenecking in Q3 2018 and lower debt servicing cost.
The Company reported Q3 2019 net profit of $2 million (AED8 m) However, after adjusting for one-off items, net profit matched the level of the prior year at $17m (AED61 m). Revenues reached $115 million (AED 422 m), the same in Q3 2019 as it was in Q3 2018.
Revenues rose 2 percent to $357 million (AED1.31 bn) in 9 months 2019 as compared $351 million (AED1.29 bn) in 9 months 2018 as increased production in the KRI offset lower realised prices and lower production in Egypt and the Company’s Zora Gas Field in the UAE. Higher production contributed $32 million (AED117 m), while reduced realised prices impacted the company’s topline by $26 million (AED95 m).
Commenting on the financial results, Dr. Patrick Allman-Ward, CEO of Dana Gas, said, "Our strong financial and operational performance over the first nine months of 2019 is a testament to the company’s growing strength as production increases and collections improve. We are also moving ahead with the development and construction of the first of our two gas processing trains in the KRI, which will allow us to produce and sell an additional 250 MMscf/d of gas by 2022."
The company’s average production in 9 months 2019 rose 8 percent to 67,100 barrels of oil equivalent per day, boepd, from 62,250 boepd in 9M 2018. KRI output rose significantly, increasing 23 percent to 31,800 boepd in 9M 2019 compared to 25,800 boepd in 9 months 2018.
Meanwhile, Egypt production slipped 3 percent to 33,600 boepd during the same time frame. As of the 3rd September, 2019, the company ceased production from the Zora field in the UAE upon acceptance of the relinquishment notice.
The independently audited report, prepared by Gaffney Cline & Associates, GCA, on behalf of Pearl Petroleum, showed that the total share of the 2P reserves in the Khor Mor and Chemchemal Fields for Dana Gas (as 35 percent shareholder in Pearl Petroleum), is equivalent to 1,087 million barrels of oil equivalent, MMboe. This is up from 990 MMboe when GCA first certified the fields in April 2016. This confirms that the fields located in the KRI could be the biggest gas fields in the whole of Iraq. The reserves were boosted in part by the booking of oil reserves in the Khor Mor Field for the first time.
The company’s billings and collections in 9 months 2019 were robust, in line with our targets. In the KRI, the company billed $116 million (AED425 m) and collected $118 million (AED433 m). The company also received a $68 million (AED249 m) dividend from Pearl Petroleum in 9M 2019.
In Egypt, the company billed $84 million (AED308 m) and collected $105 million (AED385 m) in payments, thereby successfully reducing its unpaid receivables to $119 million (AED436 m). This represents a 43 percent drop compared to the same period last year.
As at 30th September, 2019, Dana Gas's cash position stood at $392 million (AED1.43 bn), little changed from the $407 million (AED1.5 bn) at the end of 2018, and includes a dividend payment of $105 million (AED384 m) made in May and ongoing Sukuk profit payments.