Sharjah: Dana Gas, the Middle East’s largest private sector natural gas company reported a net profit of $24 million (Dh88 million), up 41 per cent in Q1 2021 compared to $17 million (Dh62 million)in Q1 2020.
The increase in net profit was the result of improved revenues from higher production in the Kurdistan Region of Iraq (KRI), and a reduction in finance cost due to lower borrowings in Q1 2021 as compared to Q1 2020.
Revenue was $106 million, 2 per cent higher compared to $104 million in Q1 2020. The improved performance was mainly due to a 9 per cent production increase in the KRI.
Realised price averaged $44/bbl for condensate and $33/boe for LPG compared to $41/bbl and $30/boe respectively in Q1 2020.
“Dana Gas has delivered a strong quarter with robust operational performance, continuing the positive momentum from the previous period. In the KRI we are moving ahead with our expansion plans to significantly boost production from 440 MMscf/d to 690 MMscf/d by April 2023. This will contribute positively to our top and bottom line,” said Dr Patrick Allman-Ward, CEO of Dana Gas.
“We maintained our strong financial position, with increased production from the KRI and lower financing costs following the repayment of the Company’s outstanding Sukuk in Q4 2020. I am pleased that we maintained the dividend to Shareholders, for the fourth consecutive year, despite adverse economic conditions.”
Production & operations
Group production in Q1 2021 averaged 64,900 boepd, a 2 per cent increase as compared to 63,650 boepd in Q1 2020. The first quarter production increase was driven by the KRI, which grew by 9% to 35,300 boepd from 32,400 boepd, building on the significant production increase in Q4 2020 after the Khor Mor plant by-pass project was completed in July 2020. Production in Egypt declined by 5 per cent to 29,050 boepd, which was more than offset by the increase in production in KRI.
In the KRI, Pearl Petroleum, the company consortium operated by Dana Gas and Crescent Petroleum, fully resumed the expansion project at the Khor Mor field. The first gas train will add 250 million cubic feet per day of much-needed additional gas production to supply the local power stations. The project construction work had been put on hold due to the COVID pandemic but is now on track for a new target start date of April 2023, after agreement to lift the force majeure. The KM250 expansion project involves a further investment by Pearl of $600 million to boost output by almost 60%.
Last month, Dana Gas announced its decision to retain and operate its onshore assets in Egypt alongside the highly prospective Block 6. The Company is currently evaluating its Block 6 Concession Area for drilling an exploration well as soon as possible
Liquidity and collections
Cash and bank balance at end of Q1 stood at $149 million (AED 546mm), an increase of 38 per cent compared to $108 million (AED 396mm) at the end of 2020.
In the KRI, the Company collected $35 million during the quarter with all invoices due from the KRG being settled in full and in a timely manner. At the current oil prices the balance of KRI overdue receivables is expected to be settled by the third quarter of this year. In Egypt, the Company has collected $23 million during quarter one and its receivables at quarter end stood at $131 million.
At the General Assembly of the Company held on 28 April 2021, the Shareholders approved a cash dividend for the fourth consecutive year. This 5.5 fils per share dividend will be distributed in May.