DUBAI (Dow Jones Newswires), August 14, 2008
Dana Gas, the United Arab Emirates-based oil and gas company, will start natural gas production from a gas field in northern Iraq in September and is preparing to drill appraisal wells at a second field next year, a top company executive said Thursday.
The Abu Dhabi stock market-listed firm will start production of 75 million-cubic-feet-a-day of gas from the Khoomor field in the Kurdish region under an early production facility "next month," Finance Director Neeraj Agrawal told Zawya Dow Jones in a phone interview.
As part of the plans, Dana Gas is also building a liquefied petroleum gas, or LPG, plant, which will be completed by year-end and raise gas production to as much as 300 million cubic feet a day, Agrawal said.
"That will be a big boost," he said.
The gas from Khoomor will be transported via pipeline to feed power plants in the Kurdish region. Dana Gas is implementing the project in a 50:50 joint venture with Sharjah's Crescent Petroleum.
Dana Gas will also spend as much as $50 million on seismic surveys and appraisal wells, to be drilled next year, at the Chamchamal field in the Kurdish region, Agrawal said.
Start-up of the Iraqi operations will help boost the company's finances, according to Agrawal.
"From next year, it's full effect on cash and revenues will be felt," he said.
Dana Gas earlier in the day said its second-quarter net profit rose 17% year-on-year to 34 million U.A.E. dirhams ($9.3 million) boosted by the company's oil and gas production in Egypt.
"It's all Egypt (and) fundamentally it's an increase in pricing," Agrawal said.
The results were largely driven by sales of Dana's Egyptian liquefied petroleum gas, or LPG, production, which is sold at world market prices - unlike the locally produced natural gas, which companies have to sell at a fixed price, Agrawal said.
Oil and gas production in Egypt stood at 2.51 million barrels of oil equivalent at the end of the second quarter as revenues benefited from higher liquefied petroleum gas and condensates production, Dana Gas said in a statement.
Dana Gas shares were up 1.8% at AED1.71 on the Abu Dhabi bourse at close Thursday.
Revenues for the quarter ended June 30 rose 28% to AED309 million on the corresponding period in 2007, the Sharjah-headquartered firm said in a statement.
Dana Gas' Ebitda, or earnings before interest, taxes, depreciation and amortization, for the second quarter grew 76% to AED164 million from AED93 million in the same period a year earlier, according to the statement.
The Sharjah-based company said first-half net profit rose to AED59 million from AED50 million in the corresponding period last year. Revenue for the same period rose 31.2% year-on-year to AED581 million, Dana Gas said.
Dana Gas will continue to monitor acquisition opportunities to support its growth plans but "nothing is happening immediately," Agrawal said.
Dana Gas was listed on the Abu Dhabi bourse in December 2005 on the basis of the estimated $1-billion project with Iran, under which the Islamic Republic agreed to pipe gas to Sharjah. The deal has yet to materialize.
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