Dana Gas swings to second-quarter net profit on oil recovery

Revenue for three months to June-end rose about 70% to $78m

Sharjah-based Dana Gas swung to second-quarter net profit as operational efficiencies and a rebound in crude prices this year boosted income.

The company posted a $113 million net profit for the three months to the end of June after reporting a $36m loss in the same period last year, it said in a statement to the Abu Dhabi Securities Exchange on Wednesday.

Revenue for the second quarter rose about 70 per cent to $78m.

"The company has delivered a very strong set of results ... as a result of our robust financial and operational performance supported by the rebound in oil prices," Dana Gas chief executive Patrick Allman-Ward said.

"Our low-cost structure has helped the company increase gross profits ... our collections in both Egypt and the KRI [Kurdistan Region of Iraq] have significantly improved, adding to our liquidity and overall financial strength."

Net profit for the first half of the year was $137m, compared with a $19m net loss in the same period a year earlier. Revenue in the first six months of the year increased 26 per cent to $148m.

Overall, oil and gas production in the fist half of the year rose to 64,000 barrels of oil equivalent per day, compared with 63,250 boepd for the same period.

The rise in output was largely due to the company's Kurdish assets, which helped offset declines in Egypt. Production from Iraqi Kurdistan rose 8 per cent to reach 34,300 boepd while output from Egypt fell 6 per cent to 29,150 boepd due to natural decline.

Collections from both regions for the first half of 2021 increased 106 per cent year on year to $185m – the highest in about five years, the company said.

Receipts by Pearl Petroleum, which controls the company's Kurdish gas assets, rose 85 per cent to $87m in the first half. Dana Gas also more than doubled its collections in Egypt during the same period, collecting $98m.

The company's cash flow also strengthened to $125m, compared with $108m as of June 30.

"We are pleased with the progress we have made in the KRI and are steadily moving ahead with our expansion plan according to schedule," said Mr Allman-Ward.

"In Egypt, we are going to continue to operate our onshore producing assets in a way to maximise value for the benefit of all our stakeholders and to prepare to drill our material offshore exploration well as soon as practicably."

In April, the company said it resumed expansion work on the Khor Mor field in Iraqi Kurdistan.

Dana Gas and Crescent Petroleum will invest $600m through the Pearl Petroleum consortium to add 250 million cubic feet per day of gas production capacity.

Gas production by the Pearl Consortium accounts for more than 80 per cent of Iraqi Kurdistan's power generation.

Last month, Dana Gas won arbitration validating the termination of an agreement to sell its onshore oil and gas assets in Egypt.

The arbitration was initiated in April by IPR Wastani Petroleum, a member of the IPR Energy Group, which had agreed to buy the assets in October.

However, Dana Gas cancelled the agreement in April and said the buyer had failed to meet certain conditions.

Dana Gas also sold its 26.4 per cent interest in Egypt's EBGDCO, a natural gas liquids extraction plant for $11.4m, in the first half of 2021.

Updated: August 11th 2021, 8:24 AM
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