Dubai: Lower energy prices tilted UAE’s Dana Gas’ nine-month profits to Dh462 million from Dh589 million.
There was ‘lower realized prices amid a decline in hydrocarbon prices in international markets’, the company said in a statement. Another reason was due to ‘additional discounts on condensate sales in the Kurdistan Region of Iraq (KRI)’, where Dana Gas continues to sell to third-party local buyers in ‘what is a competitive market as a result of the export pipeline closure earlier this year’.
Revenues also came in lower, down 21 per cent to Dh1.19 billion.
The company is 'not in a position to pay an interim dividend for the first-half of 2023'. It would consider an annual dividend payment in March next based on 'conditions prevailing at that time'.
The realized prices in the first nine months averaged $53 a barrel for condensate and $36/boe for LPG, against $85/bbl and $43/boe last year. (Dana Gas also has on ground operations in Egypt.)
All told, this impact on profitability was ‘partially offset’ by a production increase in the KRI and reduced operating costs.
"Dana Gas has demonstrated remarkable resilience in its performance throughout the first nine months of the year,” said Richard Hall, who was recently appointed as CEO.
“Our proactive measures implemented over the past few years - cost reductions and production optimization - have yielded clear operational and financial benefits and helped to offset lower hydrocarbon prices."
Challenges with receivables
Delayed collections from the KRI and Egypt operations have been cited by dana gas, where the combined receivables have risen to $153 million end September. Plus, there is the ongoing capex spend on the KM 250 expansion project.
“Dana Gas will also continue to work closely with our government partners in Egypt and the KRI to ensure timely settlement of all outstanding receivables,” said Hall, who took on the CEO role from November 6.
As of end September, the receivables were Dh389 million in KRI and Dh172 million in Egypt.
"The periodic collections from KRG, despite the ongoing pipeline shutdown, demonstrate the company’s strategic significance to KRI’s power sector," said a statement from Dana Gas. "The Company continues to steadfastly support KRI’s gas demand by the KM 250 expansion.
"Once completed, KM 250 is expected to add at least $150 million to the Company’s annual revenue, thereby significantly improving the Company’s future dividend payouts."