Dana Gas reports a 11.3% drop in its profit for the first 9 months of the year, earning $112 million due to lower energy prices and sales
UAE energy company Dana Gas reported a 11.3% decrease in its net profit for the first nine months, earning $111.6 million (AED 410 million). This drop was caused by lower prices and production levels in Egypt.
Financial Performance
The company’s revenue for the first nine months of the year dropped by 12.3%, falling to $285.3 million (AED 1.5 billion) from $325.4 million (AED 1.19 billion) in the same period last year, according to its earnings report released on Friday.
Earlier this week, Saudi oil giant Aramco also reported a 15.4% drop in its third-quarter net income, down to $27.6 billion, mainly due to lower oil prices and reduced production.
Dana Gas announced it could reduce its debt by $77.6 million (AED 285 million), bringing its total debt down to $27.8 million (AED 102 million).
The company’s overall production in the first nine months averaged 55,300 barrels of oil equivalent per day (boepd), an 8% decrease from 59,750 boepd in the same period last year.
In the Kurdistan Region of Iraq (KRI), production rose by 3% to 38,200 boepd, due to higher gas volumes supplied to local power plants, driven by increased demand. This growth followed successful efforts from last year, including improvements that boosted gas output.
However, production in Egypt fell by 24%, dropping to 17,100 boepd from 22,600 boepd last year, mainly because of natural declines in the fields. The company expects a new concession agreement to help increase investments and drilling, which will aim to improve and maximize gas production in the future.
Important Quote
“We are focusing on resolving payment issues in Egypt, which are stopping us from investing according to the new Concession Agreement. Once we receive the payments, we are ready to start our plans,” said CEO Richard Hall. “Dana Gas has invested over $2 billion in Egypt’s energy sector since 2007, making us one of the first UAE investors in the country.”
Financial Overview
The energy company currently has $150.6 million (AED 553 million) in cash, with $117.9 million (AED 433 million) held in the Pearl Petroleum joint venture.
KM250 Project
Dana Gas and Pearl Petroleum are committed to safely restarting the KM250 project, the Khor Mor gas expansion project in Iraq. After ending the previous EPC contract, Pearl Petroleum now directly controls the construction. Full construction work will begin soon, with the first gas expected in the second quarter of 2026.
“Once the KM250 expansion is up and running, it will greatly increase production and bring significant benefits to the Kurdistan Region and all of Iraq,” the company added.
Exploration Deal with Egypt
In early June, Egypt’s Parliament approved a new agreement that combines existing gas production deals into a single framework with better terms.
As part of the deal, Dana Gas will start a development and exploration program, which includes drilling 11 wells. The company plans to invest about $100 million to increase production and add 80 billion cubic feet of gas reserves. This should help balance natural production declines and keep output steady over the next few years.
The extra gas supply is expected to save Egypt’s economy over $1 billion by cutting down on the need for imported LNG and heavy fuel oil for electricity.
However, to move forward, Dana Gas has asked the Egyptian government to release $24 million out of the $59 million it owes. The company says this payment is needed to begin the first phase of the new program.
Published: 8th November 2024
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