Dana Gas, one of the largest private natural gas companies in the Middle East, has reported a 42 per cent drop in its second-quarter profit after net revenue fell due to lower oil prices.
Net profit attributable to equity holders of the parent company for the three months to the end of June declined to $33 million, the company said on Wednesday in a filing to the Abu Dhabi Securities Exchange, where its shares are traded.
Net revenue for the period fell by about 30 per cent annually to $71 million. Operating costs also declined during the period.
The company’s first-half profit dropped 25 per cent annually to $83 million as net revenue slid 20 per cent to $160 million.
“Profitability for the first half declined amid a 25 per cent drop in the average price of Brent during the first half of 2023 to $80 per barrel, compared to $107 per barrel in the first half of 2022,” Dana Gas said.
“The decline in profitability was also due to additional discounts on condensate sales in the KRI [Kurdistan Region of Iraq], where the company began to sell to third-party local buyers as other companies shut down production in the KRI.”
Oil prices traded lower in the first half, compared with the previous year, amid growing concerns about the slowdown in the global economy as the US Federal Reserve continued to raise interest rates to control inflation.
Last year, oil prices rose to close to $140 a barrel on supply concerns following Russia’s military offensive in Ukraine.
“Dana Gas’ first-half results reflect the challenging environment hydrocarbon producers have been facing amid a decline in global oil prices,” said chief executive Patrick Allman-Ward.
“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.”
Oil prices bounced back from a dip to record their sixth run of seven-day gains last week after leading oil exporters Saudi Arabia and Russia pledged to extend supply cuts to support the market.
Brent, the benchmark for two thirds of the world’s oil, was trading at $86.07 a barrel at 10.48am on Wednesday.
“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,” Mr Allman-Ward said.
Set up in 2005, Dana Gas has exploration and production assets in Egypt, KRI and UAE.
The company's overall production in the first half of 2023 averaged 59,800 barrels of oil equivalent per day, a 2 per cent decrease as compared to the same period last year as a “decline in Egypt production outweighed an increase in the KRI.”
Its cash position at the of the first half stood at $101 million, it said.
Dana Gas collected a total of $106 million in the first half of 2023, with the KRI and Egypt contributing $80 million and $26 million respectively, it said.
Pearl Petroleum, in which the company has a 35 per cent stake, recently received $101 million from the Kurdistan regional government despite “continuing challenges within Iraq and is in ongoing discussions with the KRG to settle outstanding receivables as soon as possible”, it said in the statement.
The company’s receivables in Iraq's Kurdistan region and Egypt stood at $97 million and $41 million, respectively, at the end of the first half.