DANA Gas, the UAE-based company, reported a 41% increase in profits for the first quarter of 2021, reaching 88 million dirhams, compared to 62 million dirhams during the same period in 2020, according to a statement on the company's website on Sunday (1 dollar equals 3.67 dirhams). This increase is attributed to improved revenues due to higher production in the Kurdistan region of Iraq and decreased financing costs by reducing the company’s debt in Q1 2021 compared to Q1 2020.
The CEO of DANA Gas, Dr. Patrick Allman-Ward, stated that the company maintained its strong financial position in the first quarter of this year due to increased production in Kurdistan and lower financing costs after fully settling its sukuk in Q4 2020. He added, "The company will continue to distribute cash dividends to shareholders for the fourth consecutive year despite difficult economic conditions."
DANA Gas will proceed with expansion plans in the Kurdistan region to raise production from 440 to 690 million standard cubic feet per day by April 2023, positively contributing to improving the company’s revenues and profits, according to Patrick, who also confirmed the company’s commitment to managing its producing assets in Egypt.
The company's revenues reached 389 million dirhams, an increase of 2% over Q1 2020 revenues of 382 million dirhams. This improvement is primarily attributed to a 9% increase in the company’s production in the Kurdistan region. The average realized selling prices were $44 per barrel of condensate and $33 per barrel of oil equivalent from liquefied petroleum gas, compared to $41 and $30, respectively, in Q1 2020.
Production and Operations
The average production of the group in Q1 2021 increased by 2% to 64,900 barrels of oil equivalent per day, compared to 63,650 barrels during the same period in 2020. This increase resulted from a 9% production rise in the Kurdistan region. The expansion project at the Khor Mor plant, completed in July last year, positively affected the company's production in both Q4 2020 and Q1 this year, where production in the Kurdistan region rose from 32,400 to 35,300 barrels of oil equivalent per day. Although production in Egypt declined by 5% to 29,050 barrels of oil equivalent, the company’s production in the Kurdistan region compensated for this decline.
In the Kurdistan region, DANA Gas and Crescent Petroleum resumed expansion work at the Khor Mor field, operated jointly for the Pearl Petroleum consortium, with the first gas processing lines adding 250 million standard cubic feet per day to meet the pressing local energy supply need. Construction of the project was delayed due to the COVID-19 pandemic but has now resumed in preparation for production starting in April 2023, following an agreement on lifting the force majeure status. This project entails a $600 million investment from Pearl to increase gas production by approximately 60%.
Last month, DANA Gas decided to continue retaining and operating its onshore oil and gas producing assets in Egypt, alongside the North Arish concession (sixth sector). The company is currently evaluating the sixth sector concession area to drill an exploratory well as soon as possible.
Cash Liquidity
The company reported cash liquidity of 546 million dirhams at the end of Q1, marking a 38% increase compared to 396 million dirhams at the end of 2020. In the Kurdistan region, the company received 128 million dirhams in Q1, as the Kurdistan regional government settled all dues for this period. Given current oil prices, all outstanding dues are expected to be settled during Q3 of this year.
In Egypt, the total payments received by the company during Q1 amounted to 84 million dirhams, with total receivables amounting to 480 million dirhams. The company's shareholders approved, in a general assembly meeting held on April 28, 2021, a cash dividend for the fourth consecutive year at a rate of 5.5 fils per share, which will be paid in May.
