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Higher gross profit of US$ 303 million (AED 1.1 bn) up by 5%
Annual production up 6% to 68,900 boepd
Cash reserves of US$ 184 million (AED 674 m) including impact of cash sales in KRI
Egyptian trade receivables lower on improved payments from the Government
Zora Gas Project on track to deliver first gas in H1 2015
05 February 2015
Dana Gas PJSC, the Middle East’s largest regional private sector natural gas company, today announced its preliminary un-audited results for the year ended 31 December 2014.
Dana Gas saw full year gross revenue reach US$ 683 million (AED 2.50 bn), a 5% annual increase despite a sharp fall in oil prices during the second half of 2014. This revenue increase was predominantly due to higher production from Egypt and the Kurdistan Region of Iraq (KRI). Production in Egypt rose 9% to 14.6 million barrels of oil equivalent (boe) and KRI production increased 3% to 10.4 million boe, boosting overall Group production by 6% to 25.1 million boe in 2014.
Operating profits were US$ 10 million (AED 37 million) higher in 2014 as compared to 2013. Despite improved production performance and a more stringent approach to costs, the Company posted a lower net profit of US$ 125 million (AED 457 million). This was mainly due to falling oil prices in the 3rd and 4th quarters of the year. In 2013, the Company posted a net profit of US$ 156 million (AED 571 million), enhanced by a one-off gain of US$ 39 million (AED 143 million) from the sale of MOL shares. On a quarterly basis, Q4 2014 revenue was US$ 142 million (AED 521 million) with net loss US$ 4 million (AED 15 million) as compared to US$ 186 million (AED 682 million) and net profit of US$ 35 million (AED 128 million), respectively in Q4 2013. The net loss during the quarter was primarily due to lower realized hydrocarbon prices and recognition of an impairment charge.
As of 31 December 2014, Dana Gas had collected cash of US$ 163 million (AED 597 million) from Egypt, excluding $ 47 million of offsets against Block 6 signature bonus and accounts payable. Some of the monies were reinvested into existing projects and production facilities in Egypt throughout the year and the balance will be ring-fenced to pay for commitments made under the Gas Production Enhancement Agreement. The Company was also able to commence direct, local sale of condensate and LPG in the KRI, resulting in US$ 34 million (AED 125 million) of collections. Cash balance at year end stood at US$ 184 million (AED 674 million).
Patrick Allman-Ward, CEO of Dana Gas, said: “Despite the fall in oil prices Dana Gas’ strong financial performance in 2014 was driven by a rise in annual production. Our current short-term focus is on increasing our production further, driven by our Gas Production Enhancement Agreement in Egypt and the Zora Gas Project in UAE which will add 10% to our current group production of 68,900 boepd. Our long-term focus is on our three new onshore and offshore blocks in Egypt and developing our Khor Mor and Chemchemal gas fields in the Kurdistan Region of Iraq. Our prudent and focussed approach to cost controls has made us one of the lowest cost operators in the region and we are now in a stronger position to deliver the long-term value our shareholders deserve.”
In September 2014, Dana Gas Egypt concluded a Gas Production Enhancement Agreement (GPEA) with the Egyptian Government that will deliver incremental production in the region of 270 billion cubic feet of natural gas, 9 million barrels of condensate and 450,000 tons of LPG. The revenues generated from the incremental sales will be used to pay-down the outstanding receivables held by the Egyptian Government to nominal levels by 2018. The Company has been awarded three new blocks onshore and offshore Nile Delta. Block 1 and Block 6 are 100% owned and operated by Dana Gas and Block 3 is 50% owned by Dana Gas and BP.
Kurdistan Region of Iraq
In July 2014, Dana Gas along with Crescent Petroleum and Pearl Petroleum Ltd (Consortium) disclosed it had been successful in its application for interim relief in the international arbitration case it filed with the London Court of Arbitration in October 2013 against the Kurdistan Regional Government (KRG). The interim relief award recognized the lack of payments due by the KRG and the resulting cessation of cash flow was depriving the Consortium members of their ability to pay debts as they fall due. The Tribunal had ordered the KRG to pay the Consortium, with effect from 21 March 2014, 70% of the international FOB Med prices of liquid petroleum products lifted by the KRG or for its account.
In November, the Tribunal had ordered the KRG to pay the Consortium US$ 100 million within a timeframe of 30 days by way of a second interim order. In default of its legal obligations, the KRG failed to make payment by the stipulated deadline of 17th November 2014 and as a consequence, the Tribunal's order became peremptory in nature, enabling its enforcement by the English Court. With the Tribunal’s permission, on 12th December 2014, an application to the English Court was made for the enforcement of the order, with the prospect of sanctions being imposed on the KRG for non-compliance. In addition to these interim measures ordered by the Tribunal, Dana Gas and its Consortium partners continue to pursue multi-billion dollar claims in the arbitration against the KRG for breach of contractual commitments, which will be determined in a hearing that has been ordered by the Tribunal to take place in the week of
20th April 2015.
Dana Gas secured a US$ 100 million Term Facility for the Zora Field Development Project in September 2014. The facility is being used to contribute to the debt component of the financing needed to complete the project. In November 2014, Dana Gas announced it had completed 75% of the offshore jacket which was completed and loaded onto a barge in January 2015 for installation in the gas field. Production is expected by H1 2015.
Production and Development
Overall group net production in 2014 increased by 5% to 68,900 boepd as compared to 2013’s average production of 64,700 boepd.
Dana Gas Egypt’s gas, LPG, condensate and crude oil full year output averaged 39,900 boepd, 9% higher as compared to 36,700 boepd in 2013. In the first quarter of 2014, the Company successfully completed a scheduled upgrade and maintenance work on the El Wastani gas plant that boosted output capacity by 25% to 200 mmscfd [6,650 boepd]. Q4 2014 output averaged 37,300 (Q4 2013: 39,800 boepd).
In the KRI, the Company saw its full year share of production in the Khor Mor field increase slightly by 3% to 28,500 boepd as compared to 27,600 boepd in 2013. Q4 2014 output averaged 28,400 (Q4 2013: 28,500 boepd).
Collections and Trade Receivables
Dana Gas Egypt collected US$ 210 million (AED 769 million) in 2014 as compared to US$ 134 million (AED 481 million) in 2013, an improvement of US$ 76 million (AED 288 million) as the Egyptian authorities implemented their long-standing agreement to pay down receivables owed to oil and gas producers. This included EGAS/EGPC offset of Block-6 signature bonus of US$ 20 million (AED 73 million) and US$ 27 million (AED 99 million) payable to government owned contractors against the amount due to the Company. All of the money received in Egypt will be ring-fenced for committed current and future investments. As of 31 December 2014, trade receivables in Egypt stood at US$ 233 million (AED 854 million) compared to US$ 274 million (AED 1 billion) in 2013.
Dana Gas’ KRI operations, of which it has a 40% share, collected US$ 34 million (AED 125 million) in 2014, down significantly from US$ 69 million (AED 253 million) in 2013. Included in the collection was US$ 18 million (AED 66 million) received as a guarantee against future lifting of product. As of 31 December 2014, the trade receivable balance stood at US$ 746 million (AED 2.73 billion) compared to US$ 515 million (AED 1.88 billion).
Dana Gas Sukuk
In 2014, Dana Gas received voluntary early conversion notices for the convertible Sukuk amounting to US$ 72.9 million (AED 267.2 million). Accordingly 357,094,708 ordinary shares calculated at a conversion price of AED 0.75 (nominal value of AED 1.0) were issued to satisfy the notice. These conversion will result in Sukuk profit saving of approximately US$ 5 million in 2015.
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 68,900 boepd in 2014. With sizeable assets in Egypt, KRI and the UAE, and further plans for expansion, Dana Gas is aimed to play an important role in the rapidly growing natural gas sector of the Middle East, North Africa and South Asia (MENASA) region.
Dana Gas 2014 Annual Revenue Grows to US$ 683 million (AED 2.5 Billion)
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