DANA GAS PJSC
Report of the Directors
The Board of Directors of Dana Gas PJSC (“Dana Gas” or the “Company”) are pleased to announce
the interim condensed consolidated financial results of the Company, its subsidiaries and joint
arrangements (together referred to as the “Group”) for the period ended 30 June 2023 (“the period”).
Principal Activities
Dana Gas was incorporated in the Emirate of Sharjah (“Sharjah”), United Arab Emirates, as a public
joint stock company on 20 November 2005 pursuant to incorporation decree number 429/2005 issued
by the Ministry of Economy.
Dana Gas is the Middle East’s first and largest private sector natural gas company. The Group currently
operates in the MENA (Middle East & North Africa) Region across the natural gas value chain, from
exploration and production, through gas processing and transportation, to the distribution, marketing
and utilisation of gas as feedstock and fuel to the petrochemical, industrial and the power sectors. Since
its establishment, the Company has grown to be a regional natural gas company with presence in the
United Arab Emirates, Egypt, and the Kurdistan Region of Iraq (KRI) and headquartered in Shaijah,
United Arab Emirates.
Results for first half of 2023
During the first half of 2023, the Group earned gross revenue of USD 222 million (AED 814 million)
as compared to USD 284 million (AED 1,041 million) in the first half of 2022, a decrease of 22%. This
decrease was mainly due to lower realised prices during the period which negatively impacted the
topline by USD 56 million (AED 205 million). Realised price averaged USD 56/bbl for condensate and
USD 37/boe for LPG compared to USD 87/bbl and USD 44/boe, respectively in 1H 2022.
The Group achieved a net profit of USD 83 million (AED 304 million) as compared to USD 111 million
(AED 407 million). The decrease in net profit was primarily due to lower oil prices and decline in
production in Egypt. Earnings before interest, tax, depreciation and amortisation (“EBITDA”) were
lower at USD 130 million (AED 476 million) compared to USD 164 million (AED 601 million) in the
corresponding period.
The Group’s share of production for 181 days was 10.82 million barrels of oil equivalent or 59,800
barrels of oil equivalent per day (“boepd”), a decrease of 2% compared to corresponding period
production of 11.06 million boe (61,100 boepd). Production in Kurdistan Region increased by 6% to
36,400 boepd, however, this was fully offset by a 12% decline in production in Egypt to 23,400 boepd.
Results for the quarter ended 30 June 2023
During the quarter ended 30 June 2023, the Group earned gross revenues of USD 100 million (AED 367
million) as compared to USD 144 million (AED 528 million) in the second quarter of 2022, a decrease
of 31% mainly due to lower realised prices. Realised price averaged USD 53/bbl for condensate and
USD 34/boe for LPG compared to USD 93/bbl and USD 45/boe respectively in Q2 2022.
The Group achieved net profit of USD 33 million (AED 121 million) as compared to USD 57 million
(AED 209 million) in Q2 2022. The decrease in net profit was mainly due to lower oil prices and decline
in production in Egypt. EBITDA was lower at USD 56 million (AED 205 million) compared to USD
83 million (AED 304 million) in Q2 2022.
The Group’s share of production in the second quarter was 5.16 million barrels of oil equivalent or
56,750 barrels of oil equivalent per day (“boepd”), a decrease of 5% compared to corresponding period
production of 5.44 million boe (59,800 boepd). This decline was mainly due to natural field depletion
in Egypt which resulted in production decline of 14% to 22,600 boepd as compared to 26,200 in Q2
2022 and a partial shut-down of production in the KRI.
2DANA GAS PJSC
Report of the Directors
Liquidity and Financial Resources
Cash and bank balance at period end stood at USD 101 million (AED 370 million), a decrease of 33%
compared to 2022 year-end balance of USD 151 million (AED 553 million). Cash includes USD 82 million
(AED 301 million) being 35% Company’s share of cash held at Pearl Petroleum.
The Group collected a total of USD 106 million (AED 389 million) during the period with Egypt and KRI
contributing USD 26 million (AED 95 million) and USD 80 million (AED 294 million), respectively.
During the period ended 30 June 2023, the Company paid a dividend of USD 86 million (AED 315 million)
as final dividend for 2022 bringing the total cash dividend for the financial year ended 31 December 2022 to
9 fils (2021: 8 fils).
Business Update
In line with its outlined strategy, the Dana Gas Group continues to focus on maximising the value of
its existing hydrocarbon assets and projects, while pursuing growth through a strategy of organic
exploration opportunities in our heartland areas and new business development in the upstream and
midstream value chains. We continue to balance our capital expenditure with the available sources of
cash to ensure we maintain a robust financial position.
Reserves & Resources
(a) Pearl Petroleum Company Limited
As reported previously, Dana Gas and Crescent Petroleum, joint operators of Pearl Petroleum Company
Limited (“PPCL”), estimates that the P50 total geologically risked1 resources of petroleum initially in-place
(PIIP) of the Khor Mor and Chemchemal Fields at 75 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 15 May 2019. The certification is based on the earlier work carried by GCA but updated to take into
account the current understanding of the field, production data and incorporating the recent appraisal well
drilling and test results.
In their report, GCA estimates the following reserves:
Khor Mor
• Proved plus probable (2P) gas, condensate and LPG reserves are 6.9 Tscf, 173 MMbbl and 18 MMt,
respectively, of which Dana Gas’ 35% share equates to 2.4 Tscf of dry gas, 61 MMbbl of condensate and
6 MMt of LPG.
• Proved plus probable (2P) oil reserves of 51.3 MMbbl of which Dana Gas’ 35% share equates to 18
MMbbl
Chemchemal
• Proved plus probable (2P) gas, condensate and LPG reserves are 5.7 Tscf, 215 MMbbl and 20 MMt,
respectively, of which Dana Gas’ 35% share equates to 2 Tscf of dry gas, 75 MMbbl of condensate and 7
MMt of LPG.
1 Risked PIIP figures have been calculated by means of a stochastic aggregation using GeoX software with risk
factors accounting for geological uncertainties calibrated by surrounding producing oil and/or gas fields.
3DANA GAS PJSC
Report of the Directors
Reserves & Resources (continued)
(a) Pearl Petroleum Company Limited (continued)
Dana’s share of the proved plus probable (2P) hydrocarbon reserves have increased by 10% following the
2019 certification of reserves. Management’s estimate of the total share of Dana Gas is equivalent to 1,087
MMboe, up from 990 MMboe when GCA first certified the field in April 2016. This confirms that the fields
located in the KRI could be the biggest gas fields in the whole of Iraq.
The balance between these 2P reserves figures and the joint operator’s estimated risked initially in place (gas
and oil) resources (PUP) are classified as Contingent Resources2 and Prospective Resources3.
(b) Dana Gas Egypt
Gaffney, Cline & Associates (GCA), a leading advisory firm carried out an independent evaluation of
Dana Gas Egypt’s hydrocarbon reserves as at 31 December 2022. The Group’s gross proved reserves
(IP) as at 31 December 2022 were assessed at 23 MMboe (31 December 2021: 30 MMboe). The gross
proved and probable reserves (2P) as at 31 December 2022 were estimated at 42 MMboe (31 December
2021:44 MMboe) and the gross proved, probable and possible reserves (3P) as at 31 December 2022
were estimated to be 62 MMboe (31 December 2021:73 MMboe).
GCA reserves estimation is based on the enhanced fiscal terms of the concession consolidation
agreement with the Egyptian Natural Gas Holding Company (EGAS). The agreement is subject to the
Egyptian parliament ratification which is expected later this year.
E&P Operations
(a) Pearl Petroleum Company Limited (KRI) E&P Operations
Dana Gas’s share (35%) of gross production in the KRI for the 91 days of operations in Q2 2023 was 3.1
MMboe, i.e. averaging 34,150 boe per day (Q2 2022 - DG Share 35%: 3.06 MMboe, averaging 33,600 boe
per day).
Dana Gas’ share of collections for the period stood at USD 80 million (AED 294 million) and hence realised
71% of the period’s revenue. At period end, Dana Gas’ 35% share of trade receivable balance stood at USD
97 million (AED 356 million) as compared to USD 64 million (AED 235 million) at year end 2022.
Pearl is proceeding with the development of its two world-class gas fields with in-place volumes of
approximately 75 trillion cubic feet of wet gas and 7 billion bbls of oil. In January 2020, Pearl appointed
Exterran, an engineering, procurement and construction (‘EPC’) contractor, for the first of two 250
MMscf/d gas processing trains and provide operations related technical assistance services for 5 years
post hand over of the plant. The appointment of the contractor followed final approval by the Ministry
of Natural Resources of the Kurdistan Regional Government, which oversees the project. The contract
award marks a key milestone in Pearl Petroleum’s long-term expansion plan.
The EPC contract terms reflect Exterran’s contractor financing whereby the plant will be predominantly
funded by Exterran with repayment of principal with interest over five years following completion of
the plant. Following declarations of force majeure in 2020 under the EPC contract due to COVID,
Pearl and Exterran agreed on a completion date of 30 April 2023. In 2022 Exterran was purchased by
Enerflex.
2 Those quantities of petroleum estimated to be potentially recoverable but not yet considered mature enough for
commercial development due to one or more contingencies.
3 Those quantities of petroleum estimated to be potentially recoverable from undiscovered accumulations by
future development projects.
4DANA GAS PJSC
Report of the Directors
E&P Operations (continued)
(a) Pearl Petroleum Company Limited (KRI) E&P Operations (continued)
Work on the KM 250 onsite EPC contract activities was temporarily suspended in June 2022 following
rocket attacks in the area of the construction site and plant and a state of force majeure was declared.
During the period, following enhancement of the security arrangements, Enerflex and its subcontractors
remobilized to site to recommence construction. The operator and contractor have discussed the
necessary improvements in security arrangements with the Kurdistan Regional Government required
for construction activities to fully get underway.
Production, drilling operations and non-EPC contract activities have continued throughout as normal.
(b) Egypt E&P operations
The Group’ production in Egypt for the 91 days of operations in Q2 2023 was 2.05 MMboe i.e. averaging
22,600 boepd (June 2022: 2.38 MMboe i.e. averaging 26,200), a decrease of 14% over the corresponding
period. The field annual natural decline of circa 20% was partially compensated by the intervention campaign
and production optimization operations at field and plant level.
In Egypt, the Group collected a total USD 26 million (AED 95 million) during the period and hence realized
67% of the period’s revenue. At period end, the trade receivable balance stood at USD 41 million (AED 150
million) as compared to USD 30 million (AED 110 million) at the end of2022.
In Egypt, the Company reached an agreement with the Egyptian Natural Gas Holding Company
(EGAS) for consolidation of its existing concessions on enhanced fiscal terms. The new terms will
extend the life of Egypt’s economic assets. The agreement is subject to the Egyptian parliament
ratification which is expected later this year.
UAE Gas Project
The UAE Gas Project includes Dana Gas’ 35% interest in Crescent National Gas Corporation Limited
(CNGCL), which is entitled to market the gas, and 100% interests in UGTC and Saj Gas, the entities
that own the offshore riser platform, the offshore and onshore pipelines to transport the gas and the sour
gas processing plant to process the gas.
Arbitration Cases
a) 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
Arbitral 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 had been in breach of its contractual
obligation to deliver gas under the Contract since December 2005.
The parties to the arbitrations are Crescent Petroleum and NIOC, who are the parties to the Gas Sales &
Purchase Contract (GSPC) at issue in the arbitration. Dana Gas is not a party to the GSPC, or to the
arbitration.
Dana Gas was informed by Crescent Petroleum that an award for damages in the first arbitration
against NIOC was made by the international arbitration tribunal on 27 September 2021. This first
arbitration covered the period of the first 8.5 years of the 25 year gas sales agreement from 2005 to
mid-2014. Dana Gas share of award was USD 608 million (AED 2.23 Billion) which was recorded
in the books in 2021.
5DANA GAS PJSC
Report of the Directors
Arbitration Cases (continued)
In addition, a second arbitration with a much larger claim for the 16.5 years covering the remainder
of the gas supply period from 2014 to 2030 is currently underway. The final hearing was scheduled
to commence in October 2022 in Paris, however, was delayed to March 2023. The hearing has been
further deferred and is now anticipated later this year. The final award on damages is expected by
2024. Dana Gas will also receive a portion of the next award which is expected to be more than the
sum due from the first arbitration in keeping with the longer time period.
Directors
1. Mr. Hamid Dhiya Jafar, Chairman
2. Mr. Rashid Saif Al-Jarwan, Deputy Chairman
3. Mr. Ajit Vijay Joshi
4. Mr. Hani Abdulaziz Hussein
5. Mr. Jassim MohamadRafi Alseddiqi
6. Mr. Majid Hamid Jafar
7. Ms. Najla Ahmed Al-Midfa
8. Mr. Shaheen Al-Muhairi
9. Mr. Varoujan Nerguizian
10. H.E. Younis Al Khoori
11. Mr. Ziad Abdulla Ibrahim Galadari
Auditors
The Company auditors, Ernst & Young, have issued their review report on the interim condensed
consolidated financial statements of the Group.
On behalf of Board of Directors
Directors'
08 August 2023
6Dana Gas reports AED 304 million ($83 million) Net
Profit in H1 2023
Highlights – H1 2023
▪ KRI production increased by 6% to 36,400 boepd
▪ Revenues at AED 814 million ($222 million), amid a softening of hydrocarbon prices
▪ KM250 expansion project scheduled to be completed by Q2 2024
▪ Pearl Petroleum recently received $101 million payments from the KRG
Sharjah, UAE; 9 August 2023: Dana Gas PJSC (the “Company”), the Middle East’s largest regional
private sector natural gas company, today announced its financial results for the half year ended
30 June 2023.
In the first six months of the year, the Company generated a net profit of AED 304 million
($83mm) as compared to AED 407 million ($111mm) in H1 2022. Profitability for the first half
declined amid a 25% drop in the average price of Brent during H1 2023 to $80 per barrel
compared to $107 per barrel in H1 2022. The decline in profitability was also due to additional
discounts on condensate sales in the KRI, where the Company began to sell to third party local
buyers as other companies shut down production in the Kurdistan region of Iraq (KRI).
Revenue for the first six months of the year decreased 22% to AED 814 million ($222mm)
compared to AED 1,041 million ($284mm) in H1 2022 due to lower realized prices amid the
softening global oil and gas prices. The Company’s realized prices during the period averaged
$56/bbl for condensate and $37/boe for LPG compared to $87/bbl and $44/boe respectively in
H1 2022.
The impact of lower realized prices on the Company’s profitability was partially offset by a
production increase in the KRI and reduced operating costs by 15%.
Pearl Petroleum recently received $101 million from the Kurdistan Regional Government (KRG)
despite the ongoing challenges within Iraq and is in ongoing discussions with the KRG to settle
outstanding receivables as soon as possible. Unlike other operators in the KRI Pearl’s operations
and production have continued without interruption since all its products are consumed locally.
Dr Patrick Allman-Ward, CEO of Dana Gas, commented:
“Dana Gas’s first half results reflect the challenging environment hydrocarbon producers have
been facing amid a decline in global oil prices. To counter the downturn in energy prices, the
Company has strengthened its focus on maintaining production and lowering costs, while
working with partner governments in Egypt and the KRI to settle outstanding payments.
As oil prices have turned a corner and started to rise, we are optimistic about the potential positive
impact on our Company's financial results for the remainder of the year, provided that this upward
trend persists.”
Operations & Production
The Group’s overall production in H1 2023 averaged 59,800 boepd, a 2% decrease as compared
to 61,100 boepd in H1 2022 as a decline in Egypt production outweighed an increase in the KRI.
The 12% production drop in Egypt was mainly the result of natural field declines. Owing to active
1reservoir management and optimization of production from existing wells, the reduction was
significantly below expected levels of decline for Nile Delta fields, which are typically between
20-30% each year. KRI production grew by 6% to 36,400 boepd from 34,500 in H1 2022, KRI
production was supported by the successful debottlenecking project that added 50 MMscf/d to
output in January. In the second quarter, a partial shut down for maintenance in Kor Mor was
successfully carried out without any HSSE incidents but impacted production during its duration.
Pearl Petroleum has now successfully completed the drilling of the six KM250 project
development wells. Once complete, the KM250 expansion project will add 250 MMscf/d of
production, resulting in 750 MMscf total daily production capacity.
Liquidity
The Company’s cash position at the end of H1 2023 stood at AED 370 million ($101mm), including
AED 301 million ($82mm) held at the Pearl Petroleum joint venture.
The Group collected a total of AED 388 million ($106mm) during H1 2023, with the KRI and Egypt
contributing AED 293 million ($80mm) and AED 95 million ($26 mm) respectively. In Q2 2023,
Pearl management proactively began the sale of condensate to third party local buyers which has
allowed Pearl to improve its liquidity position through regular collections on condensate sales.
The Company’s receivables in KRI stands at AED 356 million ($97 million) and in Egypt at AED
150 million ($41 million) at the end of the first half.
In May, Dana Gas also received regulatory approval to increase foreign ownership in the
Company’s shares, in line with the UAE’s new Commercial Companies Law that has abolished a
requirement that UAE nationals own 51% of onshore companies. Foreigners can now hold up to
100% of Dana Gas’s shares, up from 49%, a decision that was approved by the Company’s
shareholders at its Annual General Meeting on April 26.
---Ends---
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 2P reserves exceeding one billion
boe and average production exceeding 60,000 boepd. With sizeable assets in KRI and Egypt, 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. Visit: www.danagas.com
Communication & Investor Relations Contact
Mohammed Mubaideen
Head of Investor Relations
Ir@danagas.com
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Sentiment: neutral