Net profit of $6 million (AED 22 million) despite 41% drop in realised oil prices
Total collections of $42 million (AED 152 million) in first 3 months of the year
Regular payments in Kurdistan Gas Project re-established
First independent certification of Khor Mor and Chemchemal (Proven + Probable) 2P reserves estimated to be approximately 1 billion barrels of oil equivalent
GPEA activities in Egypt progressing well, production increasing
Zora Gas Project in UAE commences sales gas production on 14 January 2016
Sharjah, UAE; 4 May 2016: Dana Gas PJSC ("Dana Gas" or the "Company"), the Middle East's leading publicly listed natural gas company, today reported its financial results for the quarter ended 31 March 2016.
Despite a very challenging oil price environment Dana Gas has continued to remain profitable. First quarter net profit was $6 million (AED 22 million), compared with $12 million (AED 44 million) in the first quarter of 2015. The Company reported first quarter gross revenues of $82 million (AED 301 million), and Group profit was $22 million (AED 80 million). Realised price for condensates was down 41% to $30 per barrel ("bbl") and for LPG down by 29% per barrels of oil equivalent ("boe") to $ 29 per boe.
As at 31 March 2016, the Company's cash and bank balance stood at $413 million (AED 1.5 billion). The Company continues to monitor its capital requirements on an ongoing basis to ensure optimal structure. Optimisation measures includes the Company seeking, from time to time, to buy back its outstanding Sukuk though at the current time the Company has not yet determined the ultimate size of the buyback.
Dr Patrick Allman-Ward, CEO of Dana Gas said:
"The beginning of the year has been encouraging, with a good collections rate in both Egypt and Kurdistan despite the low oil price during the quarter, which should further improve revenues now that oil prices are already higher. In Iraq's Kurdistan Region, we have resumed full local sales and entered into a new agreement with the Ministry of Natural Resources to receive regular monthly payments. Furthermore, both the Khor Mor and Chemchemal Fields have had their reserves certified and we are pleased to report proven and probable resources are close to 1 billion barrels of oil equivalent as Dana Gas' share, making these fields truly world class assets.
"Our operations in the UAE and Egypt are progressing well. In the UAE, we have commenced sales of gas from our Zora Gas Field in Sharjah. And in Egypt during the quarter we have drilled and / or completed six successful development wells (including Balsam-4) and a new exploration well. All were successful and encountered gas bearing reservoirs on or above expectation. Two of the wells are already tied back and are producing with the remainder anticipated in the next two quarters. This should further boost production and expected revenues, and we expect to reach production capacity of our gas plant before year end."
KURDISTAN REGION OF IRAQ - RESERVES UPDATE
As reported previously Dana Gas and Crescent Petroleum, joint operators of Pearl Petroleum Company Limited ("PPCL"), estimate that P50 total geologically risked resources of petroleum initially in-place (PIIP) of the Khor Mor and Chemchemal Fields to be 75 Trillion standard cubic feet (Tscf) of wet gas and 7 billion barrels of oil.
PPCL appointed Gaffney Cline Associates ("GCA"), to carry out a certification of the reserves for these fields as at 31st December 2015 based on a comprehensive data set comprising ca. 1200 km 2D seismic, the 11 wells drilled in the two fields to date plus field production data over a period of seven years.
In their report dated April 2016, GCA provided Proved plus Probable (2P) gas and condensate reserves estimates for both fields. For Khor Mor these are 8.5 Tscf and 191 MMbbl and for Chemchemal 6.6 Tscf and 119 MMbbl respectively. Total Dana Gas share of the Khor Mor and Chemchemal 2P reserves is therefore 5.3 Tscf gas and 109 MMbbls condensate, equivalent to 990 MMboe.
GCA's report confirms Dana Gas' and Crescent Petroleum's belief that Khor Mor and Chemchemal have the potential to be the largest gas fields in the KRI and indeed in the whole of Iraq, making them world class assets.
PRODUCTION & DEVELOPMENT PROGRESS
First quarter net production from Egypt, KRI and UAE was 60,500 barrels of oil equivalent per day (boepd), 12% lower from the preceding first quarter 2015 of 68,700 boepd. The reasons are two-fold: a re-rating of production output in Kurdistan due to a change in interest in PPCL; and normal field decline in the Nile Delta, Egypt.
Dana Gas Egypt recorded first quarter production of 33,000 boepd as compared to 37,700 boepd in Q1 2015. The drop was due to the steady and predictable downward curve associated with normal field production decline in Nile Delta Egypt. This decline has now been arrested as production from the Balsam field ramps up.
Consistent with the Company's full year 2015 update, operations in Egypt are going well. Balsam-1, -2 and -3 are cumulatively producing 24 million standard cubic feet a day (5,000 boepd including condensate). Balsam-3 was brought on stream 6 months ahead of schedule.
Later this month, BP will start drilling the first deep (Oligocene) target exploration well in the Nile Delta's El Matariya (Block 3) onshore Concession Area. The well will be drilled to a target depth of 6,200 m and is expected to be completed by October 2016. Under the terms of the agreement, BP as operator will carry Dana Gas for its 50% share of the cost of the well, subject to an agreed cap of $39 million (AED 143 million).
Kurdistan Region of Iraq
Dana Gas' share of gross production (35%) in the KRI was 25,500 boepd as compared to 30,400 boepd in Q1 2015. On a retrospective basis, Q1 2015 production on a 35% equity share would be 26,600 boepd. Production has therefore declined by 4% quarter on quarter as LPG train optimisation continues.
United Arab Emirates
The Zora Gas Field commenced sales gas production on 14 January 2016. The gas is being transported to a newly built onshore gas processing facility in Sharjah and Dana Gas is managing gas sales and purchase agreements. The gas plant is currently producing at 60% capacity of 40 MMscf/d while commissioning is ongoing. The previously maximum tested flow rate was 50 MMscf/d.
RECEIVABLES AND COLLECTIONS
The Egyptian government made payments totalling $23.5 million (AED 86 million) in cash to Dana Gas Egypt; a realisation of 86% for the quarter. Accordingly, the trade receivable balance at the period end was $226 million (AED 829 million); an increase of 2% during the quarter.
Dana Gas's share of collections in the Kurdistan Region of Iraq during the quarter was $18 million (AED 66 million); a realisation of 95%. Trade receivable balance at the quarter end was $733 million (AED 2.7 billion); an increase of 1%.
Pearl Petroleum and the KRG's Ministry of Natural Resources have come to a new arrangement to ensure gradual reduction of past receivables in addition to the ongoing payment in full for current liquids production.
During the first quarter, the Company invested $32 million (AED 117 million) capital expenditure of which $30 million on the GPEA capital investment program in Egypt with the remaining amount being incurred for Zora Gas Field Development Project in UAE.
Kurdistan Region of Iraq
On 27 November 2015 the Tribunal of the London Court of International Arbitration (LCIA) issued a Second Partial Final Award ordering the KRG to pay PPCL the sum of $1.963 billion for outstanding unpaid invoices for the produced condensate and LPG up to 30 June 2015. The Award is final, binding and internationally enforceable, it does not depend on further claims or counter-claims by the parties to the arbitration. Further damage claims by the Consortium and counter-claims by the KRG will be heard and determined at a final two week hearing now fixed for early September 2016.
UAE Gas Project
The Gas Sales & Purchase Contract between Dana Gas' partner Crescent Petroleum and the National Iranian Oil Company (NIOC) for the supply of gas to the UAE has been the subject of international arbitration since June 2009. In August 2014, Dana Gas was notified by Crescent Petroleum that the Arbitration Tribunal has issued a Final Award on the merits, determining that the 25-year Contract between it and NIOC is valid and binding upon the parties, and that NIOC has been obligated to deliver gas under the Contract since December 2005. Crescent Petroleum has since informed Dana Gas that the final hearing for determination of the damage claims against NIOC for non-performance of the contract has now been fixed by the Tribunal for the 1 September 2016 in The Hague.
About Dana Gas
Dana Gas is the Middle East's first and largest regional private sector natural gas company established in December 2005 with a public listing on the Abu Dhabi Securities Exchange (ADX). It has exploration and production assets in Egypt, Kurdistan Region of Iraq (KRI) and UAE, with an average output of 63,900 boepd, in 2015. With sizeable assets in Egypt, KRI and the UAE, and further plans for expansion, Dana Gas is playing an important role in the rapidly growing natural gas sector of the Middle East, North Africa and South Asia (MENASA) region.
© Press Release 2016