International

Dana Gas delivers record 2021 with net profit of $317m

Published on : 2022-02-09

Dana Gas, the Middle East’s largest regional private sector natural gas company, posted a record net profit of AED1.16 billion ($317 million) in 2021 as compared to a net loss of AED1.38 billion in 2020.

Adjusted net profit for the year, excluding the other income and impairments was AED469 million versus 2020 adjusted net profit of AED131 million, an increase of 256%, reflecting robust underlying operating performance.

The increase was primarily due to higher oil prices, improved operational performance and Other Income. Other Income included AED2.2 3 billion relating to amounts due following an arbitration award. This was partially offset by impairments of AED1.65 billion related to UAE Gas assets and Goodwill.

Revenue increased 30% to AED1,657 million in 2021 compared to AED1.3 billion in 2020, supported by higher oil prices and higher production in Kurdistan Region of Iraq (KRI).

In light of the company’s strong financial performance during the year, the Board of Directors of Dana Gas determined in November 2021 to pay a dividend of 7 fils per year payable in six monthly instalments of 3.5 fils each, thereby increasing Dana Gas’s annual dividend by 27% from the previous 5.5 fils. The first interim dividend of 3.5 fils was distributed in January 2022 following shareholders’ approval in December 2021.

Dr Patrick Allman-Ward, CEO of Dana Gas, commented: “We closed the year on a strong financial footing as a result of a robust operational performance over the last 12 months. We had record gas and LPG production in the KRI in December, achieving a 50% growth in gas production over the past 3 years as well as record collections of $377 million, all of which contributed to our record profits of $317 million. This allowed us to make record dividend payments, reflecting the Board’s confidence and optimism about the future of Dana Gas.

“This growth would not have materialised without the outstanding dedication and hard work of our staff who, despite the global Covid pandemic, have worked tirelessly to ensure the company delivered on its commitments. We have progressed significantly on our expansion works at the Khor Mor plant. The first KM250 gas train is expected to go onstream as scheduled in Q2 2023. We are also pleased that our KRI operations achieved net carbon neutral status in 2021. This is an important milestone on our journey to reducing the carbon intensity of our operations to provide low-carbon energy for our customers.”


OPERATIONS & PRODUCTION

Average group production slightly declined by 2% during 2021 to 62,100 boepd versus 63,200 boepd in 2020. Production was boosted by a 5% jump in output from the KRI, which reached 33,800 boepd. 

This helped to offset a drop in production from Egypt, which fell 7% to 28,300 boepd versus 30,300 boepd in 2020 as a result of natural field depletion.

The KRI and Egypt operations have continued without interruption and maintained full production, un-impacted by the Covid pandemic. At the end of 2021, sales gas production from the KRI operations reached 452 million standard cubic feet of gas per day (mmscfd), marking a significant milestone on the back of numerous process improvements at the Khor Mor gas plant, including a bypass project completed in 2020 as well as a debottlenecking programme earlier in 2018.

In the KRI, the KM250 gas expansion works currently under way at the Khor Mor plant are progressing on schedule, with the project now fully financed after securing a 7-year $250 million loan from the US International Development Finance Corporation in September 2021. The Pearl consortium is fully committed to executing the expansion project as safely as possible and remains on track to deliver the first 250 mmscfd gas processing train in Q2 2023.

 

LIQUIDITY AND COLLECTIONS

The group’s cash balance at year-end stood at $185 million, an increase of 70% compared to $109 million at the end of 2020. The cash balance included $67 million (Dana Gas 35% share) held by Pearl Petroleum. The year-end cash balance is after payment of 3.5 fils dividend that was approved by the shareholders in December 2021.

The group collected a total of $377 million in 2021 (2020: $182 million) with Egypt and KRI contributing $193 million (2020: $80 million) and $184 million (2020: $102 million) respectively. Its collections from Egypt and the KRI rose 107% year-on-year in 2021, marking a record level of collections for the company on the back of a strong rebound in oil prices, an accelerated pace of payments from Egypt and the settlement of past outstanding KRI receivables from 2019 and 2020.

As of December 31, 2021, the company’s Egypt receivables stood at AED88 million, the lowest level since Dana Gas commenced operations in the country in 2007. Total outstanding receivables in KRI as of December 31, 2021 was AED158 million.

The decrease in receivables in Egypt and the payment of past outstanding receivables in the KRI further strengthened the company’s balance sheet and allowed the additional interim dividend payment of 3.5 fils per share that was approved at the General Meeting on December 9, 2021.

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