Dana Gas PJSC the Middle East’s largest regional private sector natural gas company, announced its financial results for the nine months ended 30 September 2012 with a net profit after tax of AED 491 million, an increase of 37% as compared to AED 359 million for the comparable period in 2011.
Revenue from the sale of hydrocarbons reduced to AED 1,766 million, with gross profit reaching AED 1,029 million. Revenues declined by 6% mainly due to a fall in natural gas production in Egypt and the temporary suspension in Q3 of LPG production in Kurdistan in Q3 2012 while maintenance and repairs are carried out to LPG storage and loading facilities.
The net profit excludes an unrealised gain of AED 139 million on Dana Gas’s 3% shareholding in MOL, the Hungarian-listed oil and gas company and a strategic partner in Dana Gas’ Kurdistan Region of Iraq (KRI) operations. This gain is booked directly to equity in line with the Company’s published accounting policy, resulting in Total Comprehensive Income of AED 630 million.
Earnings before interest, tax, depreciation, amortisation and exploration (EBITDAX) was AED 1,139 million compared to AED 1,180 million in the comparable period last year.
3 Months to September 2012
Revenue from the sale of hydrocarbons reduced to AED 512 million, with gross profit of AED 395 million. These figures represent a decrease of 21% and 12% respectively, compared to the same period of 2011. This decrease was mainly due to decline in production in Egypt and lower hydrocarbon prices during the quarter. The Company recorded a Net Profit after tax of AED 104 million in the third quarter, compared to AED 143 million in Q3 2011.
Commenting on the results, Dr. Adel AlSabeeh, Chairman of Dana Gas, said: “Our operational strength has continued to grow steadily throughout 2012 and this is reflected in our increased profitability. While our immediate priority is to address the short-term Sukuk issue, the finances and liquidity of the company are robust, and the long term prospects for Dana Gas remain very promising.”
Rashid Al-Jarwan, Executive Director and Acting Chief Executive Officer of Dana Gas, added: ”We are encouraged that the governments of Egypt and the Kurdistan Region of Iraq are making progress on the way forward regarding outstanding payments due to Dana Gas. We enjoy cooperative relations with both governments and we remain deeply committed to expanding our operations in both Egypt and the KRI.”
Production and Development
The Group’s net production averaged 59,600 barrels of oil equivalent per day (boepd) from its interests in Egypt and the KRI during the nine months ended 30 September 2012.
Dana Gas Egypt produced gas, LPG, condensate and crude oil at an average rate of 32,000 boepd in the first nine months of 2012. Production is expected to increase later in the year as compression facilities and new production wells are added, and two new fields are brought on-stream.
In the Kurdistan Region of Iraq, the Company’s 40% share of production in the Kor Mor Field for the first nine months of the year continued to increase, achieving an average rate of 27,600 boepd (2011: 21,500 boepd). This 28% increase in production was mainly due to increased gas deliveries achieved by running the two LPG trains within the plant and the early production facility (EPF) in parallel; as well as including the condensate and LPG extracted from the additional gas.
Exploration & Appraisal
During the period, the Company drilled three exploration wells. West Sama-1 was drilled in the West Manzala Concession and was a gas discovery with evaluated in-place resources of up to 6 Billion Cubic Feet (Bcf). One further exploration well in the West Manzala Concession, “Lavender”, and another in the Komombo concession “Faris” were unsuccessful and were declared dry holes.
Liquidity and Financial Resources
Group cash balances as of 30 September 2012 stood at AED 516 million (31 December 2011: AED 411 million).
During the first nine months of 2012, the Group collected AED 549 million of receivables in Egypt. At 30 September 2012, the trade receivables balance stood at AED754 million (31 December 2011: AED 836 million).
During the first nine months of 2012, the Group collected AED 291 million of its 40% share of receivables in KRI. At 30 September 2012, the Group’s share of the trade receivables balance stood at AED 1,331 million (31 December 2011: AED 880 million).
On 1 November 2012, the Company issued a separate statement to update the market regarding the $1 billion sukuk, which is secured against certain Egyptian assets as well as SajGas and UGTC.
The sukuk matured on 31 October 2012; however an NDA agreement is in place to enable talks to continue towards finding a consensual solution that is equitable for all stakeholders. For these purposes, the Company has appointed Deutsche Bank, Blackstone Group and Latham & Watkins to provide advice for the company on various aspects of the discussions with the AD hoc Committee appointed by sukukholders. The Company will continue to provide updates as further progress is made.
LNG World News Staff, November 01, 2012; Image: Dana Gas