Dana Gas announces its financial results for the first quarter ended 31st March 2012
Dana Gas PJSC, the Middle East’s largest regional private sector natural gas company, announces its financial results for the first quarter ended 31st March 2012 with a net profit after tax of AED 206 million, more than double that reported in the first quarter of 2011.
Gross revenue of AED 700 million (Q1 2011: AED 616 million) was achieved from the sale of hydrocarbons, and gross profit for the period of AED 451 million (Q1 2011: AED 337 million), representing increases of 14% and 34% respectively.
Net profit was AED 206 million (Q1 2011: AED 92 million), a 124% rise, arising principally from higher realised hydrocarbon prices during the quarter. The above Net Profit excludes an unrealised gain of AED 135 million on Dana Gas’s 3% shareholding in MOL, the Hungarian listed oil and gas company and a strategic partner in Dana Gas’s 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 for Q1 2012 of AED 341 million.
Earnings before interest, tax, depreciation, amortisation and exploration (EBITDAX) were AED 459 million (Q1 2011: AED 403 million), an increase of 14%. The revenue collections attributable to the Group during the quarter were AED 335 million of which AED 192 million was collected in Egypt and AED 143 million representing the Company’s 40% share of collections in KRI. The Company’s cash flow has been affected by macroeconomic and regional events which resulted in delayed revenue collections from its customers being mainly government entities.
Commenting on the results, Hamid Jafar, Board Chairman of Dana Gas, said:
“We have achieved our revenue estimates in the first quarter and posted strong net profit figures of AED 206 million. Our revenue collections were in line with expectation and we continue to have constructive discussions with both the Government of Egypt and the Government of the Kurdistan Region of Iraq on payment of Company’s receivables. Overall, however, this has been a reasonable quarter financially and we look forward to the rest of the year with renewed confidence.”
Ahmed Al-Arbeed, Chief Executive Officer of Dana Gas, added:
“We have maintained strong levels of net production in the first quarter. Good progress is being made on our drilling programme in Egypt, with one new field discovery (the West Al Baraka Field) in the South of the country. We plan to drill further exploration and development wells in Northern Egypt. I am also pleased to report that the commissioning and start-up of the Natural Gas liquids plant in Ras Shukheir (Egypt) is advancing well and should be operational in Q2 of this year.”
Production and Development
The Group’s Net Production averaged 63,000 barrels of oil equivalent per day (boepd) from its interests in Egypt and the KRI during first quarter of 2012.
Dana Gas Egypt produced gas, LPG, condensate and crude oil at an average rate of 34,500 boepd in the first quarter. 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 continued to increase, achieving an average rate of 28,500 boepd (2011: 19,500 boepd). This 46% increase in production was mainly due to increased gas deliveries achieved by running the 2 trains of the LPG plant and the early production facility (EPF) in parallel, and including the condensate and LPG extracted from the additional gas.
Exploration & Appraisal
The Company drilled and tested a successful exploration well, West Al Baraka-2, in the Komombo Concession in Southern Egypt. A reservoir fracturing test will be run in June to optimize the production rates and assess the hydrocarbon potential.
Liquidity and Financial Resources
Group cash balances as at 31 March 2012 stood at AED 524 million (31 December 2011: AED 411 million).
Dana Gas’s cash flow has been impacted by global macroeconomic and regional events. The revolution in Egypt last year and the subsequent unfolding turmoil in Egypt resulted in sporadic and progressively delayed payment of revenue by government-owned entities. Similarly, political disputes in Iraq have impacted planned payments by the central government to petroleum companies operating in the KRI. Despite these challenging external macroeconomic circumstances, Dana Gas hopes that these problems will resolve themselves in the short- and medium-term.
$1 billion sukuk, secured against certain Egyptian assets as well as SajGas and UGTC, are due to mature on 31 October 2012. Although the economic realities outlined above affected Dana’s ability to raise new funding, the Company is committed to finding a consensual solution that is equitable to all stakeholders. For these purposes, the company has appointed Deutsche Bank, Blackstone Group and Latham & Watkins as its financial and legal advisors to advise on various options for discussions with the sukukholders and their advisors. The Company will provide further updates as further progress is made.
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