Dana Gas, the Middle East’s largest regional private sector natural gas company, has posted a net profit of $23 million for the first half (H1) of the year, as against $13 million during H1 2016,marking an increase of 77 per cent.

The company reported gross revenues of $222 million for the period as compared to $178 million n H1 2016.

During the second quarter 2017, the company reported gross revenues of $104 million and a net profit of $12 million as compared to $96 million and $7 million respectively in Q2 2016.

Dr Patrick Allman-Ward, CEO, Dana Gas, said: “I am pleased to report a solid set of operational and financial figures for the first-half of 2017. We posted higher revenue and nearly doubled our net profit to $23 million.”

“We maintained strong production numbers by adding a further 13 per cent output in Egypt despite the planned shutdown of the El Wastani Gas Plant, which was completed successfully and without incident. Furthermore, we have plans to drill three exploration wells on Block 1 in Egypt in Q4 as part of our concession activity commitment.

“We remain excited about the potential for medium to long-term growth but also recognise the need to manage the short-term cash collection challenges until we recover affirmed receivables and thereby realise the enormous value of our assets,” he added.

The solid increase in the half-year profitability is based on several factors: firstly, a 25 per cent increase in gross revenue; secondly, an increase in the profit entitlement from Kurdistan Region of Iraq (KRI); thirdly, the positive impact of the cost management program, which further optimised operating costs by 7 per cent; fourthly, a$5 million increase in other income segment and lastly, a reduction in finance costs by $8 million as a result of settling Zora and other loans during the period. However, this increase was partly offset by a reduction in investment and finance income.

In the first half, opex dropped 7 per cent to $25 million and G&A remained steady at $7 million. Capex was down 84 per cent to $13 million as the Company continued to balance capex with available sources of cash.

Average realised prices in H1 were $40 per barrel of oil equivalent (boe) versus $30 per boe in H1 2016, boosting revenue across the portfolio.

Total average group production was 67,550 barrels of oil equivalent per day (boepd) in the first half 2017, 6 per cent higher compared to H1 2016. The increase in production was driven by higher output in Egypt, up 13 per cent and consistent performance in KRI.

The company generated $142million in free cash flow in the half-year, principally due to an industry payment from the Egyptian government of $110 million. However, the Company has financial commitments of $60 million in Egypt that have accumulated during the last 18 months of drilling activity related to GPEA investment program that need to be repaid. Furthermore, the Company has plans to drill three exploration wells on Block 1 in Egypt in Q4 as part of its concession activity commitment.

Collections were strong in the first half 2017. The collection rate in Egypt and KRI, for the first half 2017, was 229 per cent and 115 per cent respectively. The company collected $198 million, the bulk of which came from Egypt at $135 million. Collections in KRI and UAE were $55 million and $8 million respectively.

Due to the higher collections during the first-half 2017, the current cash balance, as at 30 June 2017 increased to $337 million, up from $302 million at year-end 2016 and the total trade receivable balance fell to $900 million at the period end as compared to $982millionat the end of December 2016. – TradeArabia News Service