Dana Gas profit more than halves in the second quarter on impairments

Revenue surges 31% in the first half of the year on higher hydrocarbon prices

Dana Gas was supported by favourable energy market conditions in the first half of 2022. Reuters

Dana Gas, one of the largest private natural gas companies in the Middle East, reported a more than 50 per cent drop in its second-quarter net profit, mainly due to a reversal in impairments in Egypt.

Net profit attributable to the owners in the three months ended June 30 slipped to Dh209 million ($57m) from Dh416m a year ago, the Sharjah-based company said in a filing to the Abu Dhabi Securities Exchange, where its shares are traded.

Excluding the reversal in impairments, profit for the three-month period jumped 58 per cent to Dh209m, it said.

Dana Gas's board expects to maintain its semi-annual dividend payment, with a decision to be made at its meeting in September.

It previously said that it would recommend that shareholders approve a cash dividend of 4.50 fils for the second half of 2021, bringing the total dividend for the year to 8 fils per share.

“Dana Gas delivered strong half-year results, supported by our robust operational performance, low-cost base and favourable energy market conditions,” chief executive Patrick Allman-Ward said.

“Despite an increased uncertainty around the global economy amid high inflation, the outlook for the remainder of 2022 is still encouraging, with both energy prices and demand remaining high.”

Global natural gas consumption is projected to contract slightly in 2022 and grow slowly over the following three years as Russia’s military offensive in Ukraine pushes up prices and stokes fears of further supply disruptions, the International Energy Agency said.

The company said its performance was driven by elevated hydrocarbon prices, a maintained low-cost base and strong operational performance in the Kurdistan Region of Iraq (KRI).

Revenue in the second quarter rose to 31 per cent, year on year, to Dh528m, driven by higher hydrocarbon prices.

For the first half of 2022, net profit dropped about 20 per cent annually to Dh407m, which Dana Gas mainly attributed to a reversal of impairments in Egypt, after the termination of a sale and purchase agreement.

Excluding the reversal in impairments, profit for the six-month period surged 82 per cent.

Revenue in the first-half period rose 31 per cent to Dh1.04 billion from a year ago, on higher realised prices that contributed about Dh320m to the company's turnover.

Realised prices averaged $87 a barrel for condensate and $44 for liquefied natural gas, compared to $48 and $32, respectively, in the first half of 2021.

The impact of these higher prices was partly offset by reduced production in Egypt, Dana Gas said.

The company's share of production in the second quarter was 59,800 barrels of oil equivalent per day (boepd), a decrease of about 5 per cent from 63,200 boepd a year ago.

For the first half, production was similarly down 5 per cent to 61,100 boepd.

Production in the KRI remained at similar levels but output in Egypt declined by about 9 per cent, it said.

In the KRI, Dana Gas's operations were uninterrupted despite what it described as a challenging security situation.

Production from the region rose by 1 per cent in the first half, with it KM250 expansion project “progressing well”.

During the first half, drilling of the project’s first development well was completed, while drilling operations for the second well are currently in progress.

Construction work was suspended in June but the company is working with authorities to address concerns in order to resume works, Dana Gas said.

Dana Gas will continue to maximise the value of its existing hydrocarbon assets and projects while pursuing growth through a strategy of organic exploration opportunities and new business development in upstream and midstream value chains.

“We continue to balance our capital expenditure with the available sources of cash to ensure we maintain a robust financial position,” it said.

In April, Dana Gas was included in the Abu Dhabi Securities Exchange’s new benchmark, the FTSE ADX 15 Index.

The gauge includes the 15 largest and most liquid companies on the ADX, chosen on the basis of free-float adjusted market capitalisation and median trading value.