DANA GAS POSTS $125M NET PROFIT IN 9M 2017

13/11/2017 12:04 AST

Dana Gas PJSC, the Middle East's largest regional private sector natural gas company, today announced its financial results for the third quarter, ended 30 September 2017.

The Company reported 9M 2017 revenues of $330 million and gross profit of $86 million, 18% and 38% higher compared to $280 million and $63 million in the same period 2016.

Q3 2017 generated revenues of $108 million and gross profit of $27 million, up 6% and 28% respectively on the $102 million and $21 million reported in Q3 2016.

Net profit for 9M and Q3 2017 was $125 million and $102 million respectively. This is considerably better than the $26 million and $13 million reported in the same period 2016.

Several factors led to the Company posting a strong net profit. The KRG Settlement Agreement saw a reversal of the provision for payments to the KRG, as the balance of unpaid receivables was booked to new petroleum costs, and another income accrual of $21 million in Q3, linked to dividend distribution by Pearl Petroleum.

Other factors that boosted net profit were: higher average realised prices of $39 per barrel of oil equivalent (boe) in the 9M 2017 versus $31 per boe in the 9M 2016. Group production volume was up 3%, averaging 67,600 boe in the nine months 2017 as compared to 65,600 boe in the same period. Lastly, the continuity of the Company's disciplined cost optimisation programme resulted in low OPEX and G&A: in the nine months, costs were $49 million, in-line with the nine months 2016 figures of $50 million.

CAPEX declined by 74% during 9M 2017 to $28 million driven by lower Capex in Egypt. During the quarter the Company completed one of its most critical projects. The South Faraskur Compression project has added 5 MMscf/d in volume and has guaranteed maximum capacity output through to the end of the year.

The Company has a three-well drilling programme starting in mid-November 2017. Two of the wells will be drilled on the 100%-owned North El Salhiya (Block 1) concession, namely Bahy-2 and ESAEN-1. The third onshore well is planned to be drilled in the West Manzala Development Lease.

Dana Gas generated $366 million in free cash flow in the first nine months of the year. This was the result of the condensate export sales, a $110 million industry payment from the Egyptian government and $210 million received from the KRG as a result of the Settlement Agreement. In terms of receivables, Egypt collected $145 million in the first nine months of the year, with a collection rate of 158%. Total trade receivables now stand at $224 million, which is mainly due from Egypt. The residual receivables from the KRG of $433 million have been reclassified as petroleum costs to be recovered from future sales.

The cash balance at the end of September 2017 is $562 million, up from $337 million as of 30 June 2017. The balance does not include $140 million from the KRG Settlement Agreement which is dedicated for investment in further development in the assets in the KRI.

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