Dana Gas Boosts Reserves by 40% Exiting 2008
Dana Gas PJSC, the Middle East's largest regional private sector natural gas company, has announced its financial results for the year ended December 31, 2009.
Revenue from the sale of hydrocarbons increased to AED 1.28 billion, with gross profit reaching AED 436 million. These figures represent increases of 12% and 69% respectively compared to 2008. They reflect the Company's ongoing and growing operations in Egypt, plus a full year of condensate production sales from the Khor Mor field in the Kurdistan Region of Iraq.
While a sale of 10% of the company's interest in Kurdistan, together with a sale of the Company's 50% interest in the Komombo Concession in Egypt generated significant profits, the full year net profit after tax of AED 88 million was lower than the AED 120 million
generated in 2008. The reduction is largely due to the write off of exploration costs (in line with the Company's "successful efforts" accounting policy), together with specific impairments (e.g. Tunisia and Nigerian asset value revisions, plus a reduction in inventory and land values). However, Earnings before interest, tax, depreciation, amortization and exploration (EBITDAX) increased by 150% to AED 1.44 billion compared to 2008, reflecting the gains mentioned above.
The Net Profit after tax excludes an unrealized gain of AED 370 million during 2009 on the Company's investment in MOL (the Hungarian oil and gas company, who are one of our partners in Kurdistan), booked directly to equity in line with the Company's published accounting policy.
The "Total Comprehensive Income" for 2009 is therefore AED 458 million, which is significantly higher than AED 120 million achieved in 2008.
The U.K. based advisory firm, Gaffney, Cline & Associates have carried out an independent evaluation of Dana Gas Egypt's hydrocarbon reserves as at December 31, 2009. Following this review, the Company's gross proved reserves (1P) as at December 31, 2009 are estimated to be 47 millions of barrels of oil equivalent “MMBOE (December 31, 2008: 55 MMBOE). The gross proved and probable reserves (2P) as at December 31, 2009 are estimated to be 132 MMBOE (December 31, 2008: 94 MMBOE). The gross proved, probable and possible reserves (3P) as at December 31, 2009 are estimated to be 228 MMBOE (December 31, 2008: 158 MMBOE).
The 2P reserves results give a total reserves addition of 40%. The total production replacement ratio associated with this 2P reserves increase is close to 400%.
During 2009, Dana Gas Egypt produced gas, LPG and condensate at an average rate of just over 34,700 barrels of oil equivalent per day (boepd), an increase of 20% compared to 2008 thanks to production from three of Dana Gas' recent gas discoveries that were
brought on stream during the year. Additionally, in the Kurdistan Region of Iraq, gas and condensate was produced throughout the year with the condensate being sold at market rates.
Dana Gas Egypt drilled a total of twelve exploration wells during the year which yielded eight discoveries.
During 2009, Dana Gas executed two particularly successful transactions which demonstrated the substantial value of its portfolio. In May 2009, it sold a 5% interest in Pearl Petroleum Company Ltd ("PPCL"), which holds Dana Gas' assets in the Kurdistan Region of Iraq, to the Austrian oil and gas company, OMV and a further 5% to the Hungarian oil and gas company MOL. This transaction not only demonstrated the substantial value of PPCL, it generated a profit on sale in excess of AED 1 billion, plus it also brought the valuable strategic advantage of bringing in two major European energy companies who between them, own one third of the proposed Nabucco pipeline.
In December 2009, Dana Gas farmed out a 50% interest in its Komombo Concession in Egypt to Sea Dragon Energy Ltd, a transaction which demonstrated the attractiveness of the emerging oil province in Southern Egypt and will enable the Company to accelerate its
work program on the development of the Al Baraka field. This transaction generated a profit on sale of approximately AED130 million.
Commenting on the performance for 2009, Dana Gas Chief Executive Officer, Mr. Ahmed
Al-Arbeed, said, "Dana Gas is an operationally strong and successful company. We have a good portfolio of assets and we are pleased with the progress that we have made during 2009. Our Egypt exploration program has been resoundingly successful, yielding eight
discoveries in 2009 and a 40% increase in 2P reserves at the end of the year. In addition, our end of year actual production run rate exceeded the target run rate of 40,000 boepd.
"In the Kurdistan Region of Iraq, Dana Gas continues to supply gas to the Erbil power station and continues progress in constructing the LPG Plant on which we expect to commence commissioning work shortly. Closer to home, we are approaching the execution phase of the Sharjah Western Offshore Project which will add to our production and revenues in 2011," said Mr. Al-Arbeed.
James Dewar, Dana Gas Chief Financial Officer added, "Dana Gas ended 2009 with a level of liquidity sufficient to manage our operational needs in 2010. We are balancing the financing requirements with our capital expenditure plans for 2010. We have successfully added to reserves this year, but we have also adjusted for exploration costs or made impairments, where necessary. Overall, we are satisfied the exploration and development program is adding value to the group and that our balance sheet is robust."
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