Dana Gas, the Sharjah energy company, has raised its production capacity by 12.5 per cent from the end of September, thanks to higher output from the semi-autonomous Kurdistan region in northern Iraq and Egypt.
Shares of Dana Gas rallied 8.4 per cent to close Dh0.89 on Thursday following the news.
Production reached 70,000 barrels of oil equivalent per day (boepd) in November and has remained above that level, up from the nine-month average of 62,250 boepd, the company said in a statement on Thursday. Production from the drilling of the Balsam-8 well in Egypt in the fourth quarter also contributed more than 5,000 boepd to the ramp up in production.
“The increase in production will help offset the lower realised hydrocarbon prices that have impacted the oil industry in the last quarter and support growth in our revenue and net profit figures for the full year 2018 and beyond,” said Patrick Allman-Ward, chief executive of Dana Gas.
Brent oil prices, which breached $85 per barrel level in early October, have since dropped about 30 per cent to $60 per barrel on higher supply from the United States and tepid global demand. In the Kurdish region, Dana Gas said in November it increased production by 30 per cent from the Khor Mor field, which is jointly operated with members of the Pearl Petroleum consortium. Dana Gas raised its gas output to 400 million standard cubic feet per day of gas, up from 305 million standard cubic feet per day, with over 15,000 barrels per day of condensate-a liquid that is found with gas and fetches a higher price than crude because it is easier to refine into products.
“This is expected to add up to $50 million annually to the top line without incurring any additional operational costs,” the company said.
Dana Gas' net profit attributable to equity shareholders in the third quarter fell 83 per cent to $17m because of one-off items booked in 2017 were not repeated.
Excluding entitlement adjustments following settlement with the Kurdistan Regional Government and interest on overdue receivables due from the KRG in 2017, the company’s net profit more than tripled from the third quarter of 2017.
The company made entitlement adjustments of $114m last year following the settlement with KRG and also received $17m in interest from the government on overdue receivables.