Home / NEWS / Dana Gas' H1 2017 profit soars by 77% at $23mn

Dana Gas' H1 2017 profit soars by 77% at $23mn

by Indrajit Sen on Aug 15, 2017

Dana Gas Egypt’s production output was 13% higher on a half-yearly comparable basis, 39,300 versus 34,850 boepd.
Dana Gas Egypt’s production output was 13% higher on a half-yearly comparable basis, 39,300 versus 34,850 boepd.
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Dana Gas, the UAE-based natural gas producer, has reported a robust financial performance in the first half of 2017, due to a range of factors including increased revenues, receipt of financial claims from Kurdistan and operational excellence measures.

In the first half 2017, Dana Gas reported gross revenues of $222mn and net profit of $23mn as compared to $178mn and $13mn respectively in H1 2016. During the second quarter 2017, the Sharjah-based, privately-owned company reported gross revenues of $104mn and a net profit of $12mn as compared to $96mn and $7mn respectively in Q2 2016.

The increase in the half-year profitability is based on several factors: firstly, a 25% increase in gross revenue; secondly, an increase in the profit entitlement from Kurdistan Region of Iraq (KRI); thirdly, the positive impact of the cost management program, which further optimised operating costs by 7%; fourthly, a $5mn increase in other income segment and lastly, a reduction in finance costs by $8mn as a result of settling Zora and other loans during the period.

However, this increase was partly offset by a reduction in investment and finance income.

“I am pleased to report a solid set of operational and financial figures for the first half of 2017. We posted higher revenue and nearly doubled our net profit to $23mn,” Dana Gas’ CEO Dr Patrick Allman-Ward, was quoted as saying in a press release received by arabianoilandgas.com.

In the first half, OPEX dropped 7% to $25mn and G&A remained steady at $7mn.  CAPEX was down 84% to $13mn as the Company continued to balance capex with available sources of cash. Average realised prices in H1 were $40 per barrel of oil equivalent (boe) versus $30 per boe in H1 2016, boosting revenue across the portfolio.

Total average group production was 67,550 barrels of oil equivalent per day (boepd) in the first half 2017, 6% higher compared to H1 2016. The increase in production was driven by higher output in Egypt, up 13% and consistent performance in KRI.

Dana Gas generated $142mn in free cash flow in the half-year, principally due to an industry payment from the Egyptian government of $110mn. However, the Company has financial commitments of $60mn in Egypt that have accumulated during the last 18 months of drilling activity related to GPEA investment program that need to be repaid.

Furthermore, the company has plans to drill three exploration wells on Block 1 in Egypt in Q4 as part of its concession activity commitment.

“We maintained strong production numbers by adding a further 13% output in Egypt despite the planned shutdown of the El Wastani Gas Plant, which was completed successfully and without incident,” Allman-Ward said.

Collections were strong in the first half 2017, with the collection rate in Egypt and KRI, for H1 2017 being 229% and 115% respectively. Dana Gas collected $198mn, the bulk of which came from Egypt at $135mn. KRI and UAE was $55mn and $8mn respectively.

Due to the higher collections during the H1 2017, the current cash balance, as on 30th June 2017 increased to $337mn, up from $302mn at year-end 2016 and the total trade receivable balance fell to $900mn at the period end as compared to $982mn at the end of December 2016.

“We remain excited about the potential for medium to long-term growth but also recognise the need to manage the short-term cash collection challenges until we recover affirmed receivables and thereby realise the enormous value of our assets,” the Dana Gas chief executive commented.

A detailed summary of Dana Gas’ country-wise activities and financial performance-related matters, as mentioned in the press release, follows on the next page……


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