Adnoc Gas reports third-quarter net income of $1.1bn

The company’s revenue in three months to September 30 stood at $5.8 billion

An Adnoc gas refinery. Photo: Adnoc Gas
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Adnoc Gas, the integrated gas processing unit of Adnoc, reported lower third-quarter net income in a volatile environment, although it expects to expand its production capacity in the coming months amid a surge in global demand for natural gas.

The company’s net income stood at more than $1.11 billion in the September quarter, compared with $1.16 billion in the same period last year, it said in a filing to the Abu Dhabi Securities Exchange, where its shares are traded.

However, it was 13.4 per cent up on a quarterly basis.

Revenue for the July-September period reached more than $5.80 billion, in line with the improving price environment, Adnoc Gas said.

The company said it delivered “robust financial and operational performance in a volatile market environment marked by consumer and geopolitical pressures”.

Despite market volatility, it “maintained stable margins in line with its guidance” and “continued to deliver on its growth strategy, focusing on increased efficiency to enable the export of higher-margin liquids”, Adnoc Gas added.

Global demand for natural gas is expected to see a 25 per cent increase in the next 25-30 years, Adnoc Gas said, citing third-party data.

“In the third quarter, we maintained stable Ebitda [earnings before interest, taxes, depreciation and amortisation] and net income margins, demonstrating our resilience and ability to generate attractive returns despite market headwinds,” said Ahmed Alebri, chief executive of Adnoc Gas.

The company’s third-quarter Ebitda improved to $1.86 billion, up 5 per cent quarterly.

“We have made significant progress, delivering on our growth strategy through substantial investments with $5.6 billion in contracts awarded in the first nine months of 2023. This includes the engineering procurement and construction contract awarded for the construction of carbon capture units,” Mr Alebri said.

The company is working to decarbonise its operations in line with Adnoc’s plan to reach net-zero emissions by 2045. The state-run energy company also aims to reach zero methane emissions by 2030, the Abu Dhabi Media Office said in July.

In the first nine months of the year, Adnoc Gas reported a net income of $3.37 billion, compared to $3.71 billion in the prior year period. However, its revenue stood at $16.43 billion during the period.

“Revenue was impacted by a less favourable pricing environment in the first nine months of 2023,” the company said.

It managed to deliver “robust financial results for the first nine months of the year despite a lower pricing environment compared to 2022”, Mr Alebri said.

Capitalising on growing global demand for natural gas, Adnoc Gas has signed liquefied natural gas supply deals valued between $9 billion and $12 billion this year.

It has signed agreements with various companies including Japan Petroleum Exploration Company Limited, Indian Oil Corporation Limited, PetroChina International and Jera Global Markets.

Competition for LNG has increased since Russia's invasion of Ukraine last year, with Europe importing record volumes of the supercooled fuel to replace Moscow's gas supplies.

Global LNG trade hit a high of $450 billion in 2022 amid a surge in European demand, according to the International Energy Agency.

Adnoc Gas has also approved an inaugural interim cash dividend of more than $1.62 billion for distribution on December 14, equivalent to over 7.77 fils per share. It will be paid to shareholders who own Adnoc Gas shares on the record date of November 24.

The company said free cash flow generated in first nine months is sufficient to cover the full-year dividend of $3.25 billion.

It expects to pay another $1.62 billion in final cash dividends for 2023 fiscal in the second quarter of next year. The company aims to increase the annual dividend payment from $3.25 billion by 5 per cent per annum on a per-share basis from 2024 to 2027.

“This reflects Adnoc Gas’s confidence in its strong and visible future cash flows, that allows for both investment in long-term growth while also providing stable shareholder returns,” the company said.

Updated: November 14, 2023, 6:24 PM