Dubai: Dana Gas, an energy company operating in Egypt and the Kurdistan Region of Iraq, reported a net profit of Dh304 million for the first half of 2023, down 25.3 per compared to Dh407 million in the same period last year.
The company attributed profit decline amid a 25 per cent drop in the average price of Brent during H1-2023 to $80 per barrel compared to $107 per barrel in H1-2022. “The decline in profitability was also due to additional discounts on condensate sales in the KRI, where the company began to sell to third party local buyers as other companies shut down production in the Kurdistan region of Iraq (KRI),” Dana Gas said on Wednesday in a filing to the Abu Dhabi Securities Exchange where its shares are traded.
“Dana Gas’s first half results reflect the challenging environment hydrocarbon producers have been facing amid a decline in global oil prices,” said Dr Patrick Allman-Ward, CEO of Dana Gas. “To counter the downturn in energy prices, the company has strengthened its focus on maintaining production and lowering costs, while working with partner governments in Egypt and the KRI to settle outstanding payments.”
In terms of financials, the company's revenue for the first half of the year dropped by 22 per cent to Dh814 million, down from Dh1.04 billion in the previous year. This decline was attributed to lower realized prices resulting from the softening global oil and gas prices. The average realized prices for condensate and LPG were $56/bbl and $37/boe respectively, compared to $87/bbl and $44/boe in H1-2022.
The company’s receivables in KRI stood at Dh356 million and in Egypt at Dh150 million at the end of the first half.
Offsetting the impact
Despite these challenges, Dana Gas managed to partially offset the impact of lower realized prices by increasing production in the KRI and reducing operating costs by 15 per cent. The company remains engaged in discussions with the Kurdistan Regional Government (KRG) to address outstanding receivables.
Operations & Production
In terms of production, Dana Gas experienced a slight decrease of 2 per cent in overall production during H1-2023, averaging 59,800 boepd compared to 61,100 boepd in H1-2022. This reduction was primarily due to a decline in Egypt's production, which dropped by 12 per cent due to natural field declines. On the other hand, KRI production increased by 6 per cent to 36,400 boepd, supported by successful projects.
“As oil prices have turned a corner and started to rise, we are optimistic about the potential positive impact on our company's financial results for the remainder of the year, provided that this upward trend persists,” the CEO said.
Pearl Petroleum successfully completed the drilling of six KM250 project development wells. This project is expected to add 250 MMscf/d to production capacity, resulting in a total daily production capacity of 750 MMscf.
The company's liquidity position by the end of H1-2023 amounted to Dh370 million, including Dh301 million held within the Pearl Petroleum joint venture.