Group Production up by 14%, approaching 70,000 boepd goal
Sharjah, UAE; 9 November 2016
Dana Gas PJSC (“Company”), the Middle East’s largest regional independent natural gas company today announced its financial results for the period ended 30 September 2016.
Highlights
Dr Patrick Allman-Ward, CEO, Dana Gas, said:
“During the quarter we continued to make progress on our group production output goals, reaching 69,400 boepd. This highlights the success of our focus on organic growth and disciplined capital expenditure during the last 18 months. Despite our collections decreasing due to disappointing payment delays from Egypt, we have managed to offset these through better than anticipated collections in Iraq’s Kurdistan Region. Nevertheless, we remain mindful of our long-term cash requirements, and we will have to review our operational and capital expenditure in Egypt for 2017 if the situation does not improve.”
Financial Results
The Company reported nine months and third quarter revenues of $280 million and $102 million as compared to revenues of $324 million and $93 million in the same period 2015. Lower oil prices over the first nine months of 2016 led to a decline in revenues. Combined average realised liquids price during the third quarter was $32 per barrel of oil equivalent (boe) as compared to $41 per boe in the third quarter 2015. However, the third quarter’s incremental production in Egypt and new production from Zora Gas Field pushed revenue higher on a quarter-on-quarter comparable basis.
The Company booked a third quarter and nine months net profit of $13 million and $26 million as compared to a net loss of $9 million and a gain of $10 million in the corresponding periods in 2015. Profits rose due to a combination of accrued interest due on overdue receivables from the KRG and additional reductions in operating expenditure and G&A.
Collections and Cash Balance
Total collections for the third quarter and nine months period were $48 million and $147 million respectively.
Egypt’s collections for the nine months were $69 million, representing 77% of total revenues over the period. Egypt’s receivable balance end Q3 increased to $242 million (Q2 2016: $230m).
In Kurdistan Region of Iraq (KRI) collections stood at $64 million, representing 121% of the total revenues for the period. The Company’s share of the KRI’s receivables balance was down to $722 million as of 30 September 2016 (Q2 2016: $726m).
At period end the Company’s cash and bank balance stood at $322 million (31 December 2015: $470m). Whilst the Company continues to balance its inflows with outflows, the decline in cash balance was mainly due to final capital payments for the Zora Gas Project, repurchase of $50 million of Ordinary Sukuk and quarterly Sukuk profit payments.
Operations
Group production for Q3 2016 was 69,400 barrels of oil equivalent per day (boepd), a 14% increase from 60,800 boepd in Q3 2015. The main contributing factor was Egypt, which increased its production by 24% on a year-on-year basis to 40,000 boepd (reaching maximum plant capacity). The high potential Block 3 Mocha-1 well in Egypt operated by BP is due to reach its final target depth early 2017.
In the KRI production remains steady at 26,100 boepd (Q3 2015: 28,000 boepd).
In the UAE, production in the Zora Gas Field has continued to decline in the third quarter with production of 2,560 boepd as compared to 3,250 boepd in Q2 2016. The well workover planned to take place in October has been deferred as the Company undertakes further analysis to determine what additional work may be required to improve the flow rates.
—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 an average output of 66,650 boepd in H1 2016. With sizeable assets in Egypt, KRI and the UAE, 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
+971 6 519 4401
Investor.relations@danagas.com
Highlights
Sharjah, UAE 11 August 2016
Dana Gas (“Dana Gas” or the “Company”), the Middle East’s largest regional private sector natural gas company today announced its financial results for the first half and second quarter ended 30 June 2016.
In the second quarter 2016, the Company reported a net profit of $7 million, similar to the $7 million in Q2 2015. Revenue was $96 million (AED 351 million) as compared to $116 million (AED 425 million) in Q2 2015. The reduction was due to the decline in comparable hydrocarbon prices, which was offset by a combination of certain interest, reversals in provisions and a gain on the buy-back of the Ordinary Sukuk. The Company also received an $8 million (AED 29 million) contribution from the Zora field in the UAE and a revenue boost from incremental production during the quarter in Egypt.
Average realised prices for condensates in the second quarter was $34 per barrel (bbl) and LPG was $27 barrel of oil equivalent (boe). This is compared to $59 bbl for condensates and $36 boe for LPG in the second quarter 2015 and $30 bbl and $29 boe respectively, in the first quarter 2016.
At the period end the Company’s cash and bank balance stood at $344 million (AED 1,261 million), compared to $413 million (AED 1,514 million) as at 31 March 2016. The reduction was principally due to the repurchase of $50 million (AED 183 million) (par value) of the Company’s outstanding Ordinary Sukuk, which resulted in one-off gain of $6 million (AED 22 million). The rest of the reduction was accounted for by capital expenditure in Zora, Sukuk profit payment and other overheads.
Group production in the second quarter 2016 was 66,650 barrels of oil equivalent per day (boepd), up 1% on Q2 2015. In Egypt, Balsam Field added incremental production of 4,000 boepd. The Zora Gas Field, which came on stream in January, contributed 3,250 boepd to Group production during the period.
For the first half of 2016, Dana Gas reported revenues of $178 million (AED 652 million) compared to $231 million (AED 847 million) in the same period in 2015. The reduction was again principally due to the sharp decline in hydrocarbon prices. Net profit was $13 million (AED 48 million) compared to $19 million (AED 69 million) in H1 2015. The fall in revenues was balanced by lower G&A and operating costs as well as investment and finance income.
Dr Patrick Allman-Ward, CEO of Dana Gas, said:
“We continue to make good progress with our operations by reducing costs and increasing production. Notable has been the increase in production from our Egyptian fields, which is now at the maximum capacity for the gas processing plant. We are currently drilling the deep Oligocene exploration well onshore Nile Delta and we anticipate that the well results will be known before year-end. During the period, we continued to maintain a steady collections rate and we have $344 million of cash at mid-year. However, the overall business environment remains challenging. In September the next phase of the arbitration case with the KRG will take place in which all of the outstanding contractual issues will be resolved.”
PRODUCTION AND DEVELOPMENT PROGRESS
Egypt
Dana Gas Egypt delivered average production of 36,550 boepd during the second quarter of 2016; an 11% increase on the 33,000 boepd production in the first quarter 2016 and a 4% increase on second quarter 2015.
In the first half 2016, Dana Gas Egypt completed the installation of a 17-kilometer pipeline in the Nile Delta region, linking the Balsam Field to the El-Wastani gas processing plant some three months ahead of schedule. This resulted in an additional production of 4,000 boepd and our gas processing plant reaching full capacity. Additional debottlenecking to add further daily capacity of up to 13,000 boepd by the first quarter 2017 is being considered.
The increase in production at Balsam is part of the Gas Production Enhancement Agreement (GPEA) signed with the Egyptian Government in August 2014, which aims to provide a significant amount of incremental production over a three-year work programme, which will see the remaining overdue receivables recovered by 2019.
On the 6 May 2016, Dana Gas, with its partner and operator BP, commenced drilling operations at the Mocha-1 well in the Nile Delta’s El Matariya (Block 3) onshore Concession Area. The well is to be drilled to a target depth of 6,200 m and first results are expected in the fourth quarter 2016.
Kurdistan Region of Iraq
Production remained steady on a quarter-on-quarter basis. The Company’s share of production, now 35%, was 26,100 boepd during the second quarter. On a like-for-like basis, Q2 2015 production on a 35% equity share would have been 26,250 boepd.
In April 2016, Gaffney Cline Associates (‘GCA’) provided an updated reserves estimate on PPCL’s two fields, Khor Mor and Chemchemal confirming that they have the potential to be the largest gas fields in the KRI and indeed in the whole of Iraq.
The 2P (proved and probable) reserves in place for Khor Mor are 8.5 Tscf and 191 MMbbl respectively of which Dana Gas’ 35% interest equates to 3 Tscf and 67 MMbbl of condensate. For Chemchemal, 2P reserves in place are 6.6 Tscf and 119 MMbbl respectively, with Dana Gas’ 35% interest being 2.3 Tscf and 42 MMbbl of condensate.
United Arab Emirates
The Zora Gas Field has been in continuous production since 28 February 2016. Production from the Zora field in Q2 2016 was 295,750 boe or an average of 3,250 boepd during the second quarter. The gas plant continues to operate at a reduced capacity as commissioning continues.
RECEIVABLES AND COLLECTIONS
As at 30 June 2016, total group trade receivables stood at $960 million (AED 3.5 billion). The Company collected a total of $99 million (AED 363 million) in the first half of 2016 representing around 100% realisation of billed amounts.
In Egypt, collection was $49 million (AED 180 million), bringing the trade receivable balance at the period end to $230 million (AED 843 million) (31 December 2015: $221 million – AED 810 million).
Dana Gas’s share of collections in the KRI during the first half was $42 million (AED 154 million). The trade receivable balance at 30 June 2016 was $726 million (AED 2,661 million) (31 December 2015: $727 million – AED 2,665 million).
In the UAE, Dana Gas collected $8 million (AED 29 million). At period end, trade receivable balance was $2 million (AED 7 million) (31 December 2015: Nil).
CAPITAL EXPENDITURE
Capital expenditure investment during H1 2016 was $80 million (AED 293 million). The focus of the expenditure was on the GPEA capital investment program and the Zora Gas Field Development Project in the UAE.
ARBITRATION
Kurdistan Region of Iraq
The London Court of Arbitration (LCIA) will hear the remaining contractual issues to be decided and matters of principle concerning the further damage claims from the Consortium and counter-claims by the KRG in two further hearings, the first two-week hearing is set for 5 September 2016. The second and final two week hearing is yet to be scheduled, but is expected to take place in either Q4 2016 or Q1 2017.
UAE Gas Project
On 18 July 2016, the English High Court finally dismissed the remaining grounds of appeal by the National Iranian Oil Company (NIOC) against the 2014 arbitration award. The 2014 arbitration award found in favour of Dana Gas’ partner Crescent Petroleum Company International Limited and Crescent Gas Corporation Limited on all issues. NIOC appealed the 2014 arbitration award to the English High Court. Most of the grounds of appeal were previously heard and dismissed by the Court in March 2016. The finalisation of the appeal in July 2016 confirms that the 2014 award is final and binding and that NIOC has been in breach of its gas supply obligations since 2005. A final hearing to determine the damage claims against the NIOC for non-performance of the contract has now been fixed by the Arbitration Tribunal for the 28 October 2016 in The Hague.
—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 an average output of 66,650 boepd in H1 2016. With sizeable assets in Egypt, KRI and the UAE, 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
Brunswick Group
Jade Mamarbachi
+971 50 600 3829
Arqaam Capital is delighted to invite you to the Dana Gas Q2 2016 Earnings Conference Call
Thursday, August 11, 2016 at 4:00 pm (GST), 8:00 am (New York) and 1:00 pm (London)
Speakers:
Dr. Patrick Allman-Ward, Chief Executive Officer
Chris Hearne, Chief Financial Officer
Senior Management Team
Host:
Ziad Itani, Arqaam Capital
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In June 2004, Dana Gas was awarded a 100% working interest in the Komombo concession area. The Area measured approximately 23,000 square kilometres and was located in Upper Egypt west of Nile River north of Aswan. Dana Gas farmed-out a 50% share interest to Sea Dragon Energy In December 2009 & January 2010. Dana Gas maintained its 50% working interest in the Komombo Concession together with Sea Dragon Energy up until early 2014 when it sold its interests to Mediterra Energy Corporation.
Dana Gas drilled the first successful exploration discovery in May 2007, the first commercial petroleum discovery anywhere in Upper Egypt. From 2008 to 2012, an additional 14 exploration and development wells were successfully drilled as part of the field development plan of which 5 wells had small scale frack jobs carried out. Komombo started production in 2008 from the Al Baraka Development Lease and in 2013 from the West El-Baraka Development Lease. Cumulative production till end June 2014 was over 1 million barrels.
The Fares village is located five kilometres to the east of the Al Baraka Development Lease. Following some damage caused by flooding in the village in 2013, some of the villagers initiated legal action, claiming there was a relation between the well-fracking that had taken place and the flooding.
In order to establish whether there was any possible link (however unlikely) between the flooding and the limited fracking program that had been carried out in the Al Baraka Development Lease wells, Dana Gas first carried out an internal investigation. In the internal investigation, Dana Gas reviewed the timing of the fracking, the depth of the wells and the frack zones and compared these to the distance to Fares village in order to establish the potential for any stimulated seismic activity and possible impact on ground water and sewage systems. Having investigated the above factors, it was concluded that:
In addition, no evidence of oil could be found in the water in Fares village which would have been the case had any kind of breakthrough occurred between the oil reservoir and the water table (however geologically improbable). Local authorities also verbally informed Dana Gas that the flooding had been caused by a failed municipal drainage system.
Despite finding that there was no plausible connection the Company thereafter commissioned a further external study by D’Appolonia in 2015 In order to independently evaluate these conclusions and present a third party, independent technical opinion based on data analysis and field observations. D’Appolonia is an independent engineering consulting company and is headquartered in Italy. They provide integrated engineering services to the public and private markets in the areas of the environment, oil and gas, infrastructure and transport, electronics and telecommunications. D’Appolonia is part of the RINA Group, a leading international classification, verification and certification provider. The conclusions from their study are:
The D’Appolonia report concludes with the following remarks: “Given the information obtained and reviewed for this study, there is no evidence that Dana Gas could have either introduced more surface water to the existing system or significantly altered the drainage of such surface waters. Based on the data, it can be concluded that the Dana Gas activities neither directly nor indirectly caused the alleged flooding in Fares Village. It is rather the lack of sewage and irrigation drainage systems that are the probable cause of the poor drainage and frequent flooding.”
END
Highlights
Dana Gas PJSC (“Dana Gas” or the “Company”), the Middle East’s leading publicly listed natural gas company, today reported its financial results for the quarter ended 31 March 2016.
Despite a very challenging oil price environment Dana Gas has continued to remain profitable. First quarter net profit was $6 million (AED 22 million), compared with $12 million (AED 44 million) in the first quarter of 2015. The Company reported first quarter gross revenues of $82 million (AED 301 million), and Group profit was $22 million (AED 80 million). Realised price for condensates was down 41% to $30 per barrel (“bbl”) and for LPG down by 29% per barrels of oil equivalent (“boe”) to $ 29 per boe.
As at 31 March 2016, the Company’s cash and bank balance stood at $413 million (AED 1.5 billion). The Company continues to monitor its capital requirements on an ongoing basis to ensure optimal structure. Optimisation measures includes the Company seeking, from time to time, to buy back its outstanding Sukuk though at the current time the Company has not yet determined the ultimate size of the buyback.
Dr Patrick Allman-Ward, CEO of Dana Gas said:
“The beginning of the year has been encouraging, with a good collections rate in both Egypt and Kurdistan despite the low oil price during the quarter, which should further improve revenues now that oil prices are already higher. In Iraq’s Kurdistan Region, we have resumed full local sales and entered into a new agreement with the Ministry of Natural Resources to receive regular monthly payments. Furthermore, both the Khor Mor and Chemchemal Fields have had their reserves certified and we are pleased to report proven and probable resources are close to 1 billion barrels of oil equivalent as Dana Gas’ share, making these fields truly world class assets.
“Our operations in the UAE and Egypt are progressing well. In the UAE, we have commenced sales of gas from our Zora Gas Field in Sharjah. And in Egypt during the quarter we have drilled and / or completed six successful development wells (including Balsam-4) and a new exploration well. All were successful and encountered gas bearing reservoirs on or above expectation. Two of the wells are already tied back and are producing with the remainder anticipated in the next two quarters. This should further boost production and expected revenues, and we expect to reach production capacity of our gas plant before year end.”
KURDISTAN REGION OF IRAQ – RESERVES UPDATE
As reported previously Dana Gas and Crescent Petroleum, joint operators of Pearl Petroleum Company Limited (“PPCL”), estimate that P50 total geologically risked resources of petroleum initially in-place (PIIP) of the Khor Mor and Chemchemal Fields to be 75 Trillion standard cubic feet (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 31st December 2015 based on a comprehensive data set comprising ca. 1200 km 2D seismic, the 11 wells drilled in the two fields to date plus field production data over a period of seven years.
In their report dated April 2016, GCA provided Proved plus Probable (2P) gas and condensate reserves estimates for both fields. For Khor Mor these are 8.5 Tscf and 191 MMbbl and for Chemchemal 6.6 Tscf and 119 MMbbl respectively. Total Dana Gas share of the Khor Mor and Chemchemal 2P reserves is therefore 5.3 Tscf gas and 109 MMbbls condensate, equivalent to 990 MMboe.
GCA’s report confirms Dana Gas’ and Crescent Petroleum’s belief that Khor Mor and Chemchemal have the potential to be the largest gas fields in the KRI and indeed in the whole of Iraq, making them world class assets.
PRODUCTION & DEVELOPMENT PROGRESS
First quarter net production from Egypt, KRI and UAE was 60,500 barrels of oil equivalent per day (boepd), 12% lower from the preceding first quarter 2015 of 68,700 boepd. The reasons are two-fold: a re-rating of production output in Kurdistan due to a change in interest in PPCL; and normal field decline in the Nile Delta, Egypt.
Egypt
Dana Gas Egypt recorded first quarter production of 33,000 boepd as compared to 37,700 boepd in Q1 2015. The drop was due to the steady and predictable downward curve associated with normal field production decline in Nile Delta Egypt. This decline has now been arrested as production from the Balsam field ramps up.
Consistent with the Company’s full year 2015 update, operations in Egypt are going well. Balsam-1, -2 and -3 are cumulatively producing 24 million standard cubic feet a day (5,000 boepd including condensate). Balsam-3 was brought on stream 6 months ahead of schedule.
Later this month, BP will start drilling the first deep (Oligocene) target exploration well in the Nile Delta’s El Matariya (Block 3) onshore Concession Area. The well will be drilled to a target depth of 6,200 m and is expected to be completed by October 2016. Under the terms of the agreement, BP as operator will carry Dana Gas for its 50% share of the cost of the well, subject to an agreed cap of $39 million (AED 143 million).
Kurdistan Region of Iraq
Dana Gas’ share of gross production (35%) in the KRI was 25,500 boepd as compared to 30,400 boepd in Q1 2015. On a retrospective basis, Q1 2015 production on a 35% equity share would be 26,600 boepd. Production has therefore declined by 4% quarter on quarter as LPG train optimisation continues.
United Arab Emirates
The Zora Gas Field commenced sales gas production on 14 January 2016. The gas is being transported to a newly built onshore gas processing facility in Sharjah and Dana Gas is managing gas sales and purchase agreements. The gas plant is currently producing at 60% capacity of 40 MMscf/d while commissioning is ongoing. The previously maximum tested flow rate was 50 MMscf/d.
RECEIVABLES AND COLLECTIONS
The Egyptian government made payments totalling $23.5 million (AED 86 million) in cash to Dana Gas Egypt; a realisation of 86% for the quarter. Accordingly, the trade receivable balance at the period end was $226 million (AED 829 million); an increase of 2% during the quarter.
Dana Gas’s share of collections in the Kurdistan Region of Iraq during the quarter was $18 million (AED 66 million); a realisation of 95%. Trade receivable balance at the quarter end was $733 million (AED 2.7 billion); an increase of 1%.
Pearl Petroleum and the KRG’s Ministry of Natural Resources have come to a new arrangement to ensure gradual reduction of past receivables in addition to the ongoing payment in full for current liquids production.
CAPITAL EXPENDITURE
During the first quarter, the Company invested $32 million (AED 117 million) capital expenditure of which $30 million on the GPEA capital investment program in Egypt with the remaining amount being incurred for Zora Gas Field Development Project in UAE.
ARBITRATION
Kurdistan Region of Iraq
On 27 November 2015 the Tribunal of the London Court of International Arbitration (LCIA) issued a Second Partial Final Award ordering the KRG to pay PPCL the sum of $1.963 billion for outstanding unpaid invoices for the produced condensate and LPG up to 30 June 2015. The Award is final, binding and internationally enforceable, it does not depend on further claims or counter-claims by the parties to the arbitration. Further damage claims by the Consortium and counter-claims by the KRG will be heard and determined at a final two week hearing now fixed for early September 2016.
UAE Gas Project
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 Arbitration 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 has been obligated to deliver gas under the Contract since December 2005. Crescent Petroleum has since informed Dana Gas that the final hearing for determination of the damage claims against NIOC for non-performance of the contract has now been fixed by the Tribunal for the 1 September 2016 in The Hague.
—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 an average output of 63,900 boepd, in 2015. With sizeable assets in Egypt, KRI and the UAE, 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.
Arqaam Capital is delighted to invite you to the Dana Gas Q1 2016 Earnings Conference Call
Monday, May 4, 2016 at 4:00 pm (UAE), 8:00 am (New York) and 1:00 pm (London)
Speakers:
Dr. Patrick Allman-Ward, Chief Executive Officer
Senior Management Team
Host:
Ziad Itani, Arqaam Capital
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Dana Gas – Crescent Petroleum gas project brings large economic and social benefits to Kurdistan Region of Iraq
Study by PWC shows US$1.2 billion investment has already enabled fuel cost savings to the KRG of $16 billion and yielded further downstream economic benefits of over US$10 – 15 billion for the Kurdistan Region
Dana Gas and Crescent Petroleum today announce the findings of the ‘Socio Economic Benefits Report’ undertaken by PwC on the impact of their combined investment in their Gas Project in the Kurdistan Region of Iraq in partnership with their Pearl Petroleum Consortium partners. The report concludes that this investment has and will continue to make a significant contribution towards the KRI’s economic and social development, in support of the Kurdistan Regional Government’s (‘KRG’) strategic policy and development priorities at regional, national and international levels.
The Consortium’s total investment of over US$1.2 billion thus far in the development of Kor Mor and Chemchemal fields represents one of the largest private sector investments in Iraq’s oil and gas sector, enabling 1,750 MW of affordable electricity supply for millions of people in the Kurdistan Region. It is also achieving over US$ 3.4 billion of recurring annual savings in fuel costs for the KRG for power generation, totaling close to $16 billion in savings from the start of production in 2008 calculated until the end of 2014. From an environmental perspective as well, the reduction of greenhouse gas emissions as a result of using cleaner natural gas at the power stations is valued at about $300 million per year.
The report also estimates that the Gas Project has, as a result of increased availability of electricity, enabled additional private sector investment in the KRI of over $30 billion with resulting significant GDP growth. The downstream economic impact is estimated by the report at between US$ 9.6 billion to $15.5 billion (40% – 66% of the 2011 GDP of KRI).
Majid Jafar, CEO of Crescent Petroleum and Board Managing Director of Dana Gas, said: “We are proud that our investment and project have brought such important benefits to the government and people of the Kurdistan Region, in particular through fuel cost savings for affordable electricity and the additional investments and economic benefits that this has enabled. This professional report by an internationally reputed consulting firm has quantified these benefits, and we hope to expand our investments and production under our contract going forward for the benefit of the people of Kurdistan Region and all of Iraq.”
Patrick Allman-Ward, CEO of Dana Gas, added: “Despite the challenges we have faced including with payments, we have demonstrated our unwavering commitment to the Kurdistan Region and the KRG as a long-term partner through our continued operations and production, and we hope to build upon this in the years to come. The gas resources we have proven up through our appraisal have significant potential for further growth potential as well.”
As joint operators of the Khor Mor Field on behalf of the Pearl Consortium, Dana Gas and Crescent Petroleum are currently producing an average of 84,000 barrels of oil equivalent (boe) per day including 340MMscfd of natural gas as well as condensates and LPG, with total cumulative production of over 150 million boe to date since continuous production began in October 2008.
Major technical achievements of the companies’ operations include: installing a 180km high pressure gas transmission pipeline across challenging mountainous terrain that required the clearing of minefields; first gas production after only 16 months; drilling successfully to tertiary reservoir formations at depths of 2,300 metres, and importing and installing over 64,000 tonnes of equipment transported internationally by sea, air and land with over 3,500 truck-loads, including the state-of-the-art gas processing plant imported from the USA.
During the project’s construction phase, work was provided to over 2,000 Iraqi workers from all ethnic groups and sects, supported by expatriate workers of over 20 nationalities from the region and worldwide. The companies have successfully implemented a nationalisation program, and already achieved the target of 80% local staff in their operations workforce, while currently implementing a major training program for local staff.
Crescent Petroleum and Dana Gas have also implemented a corporate social responsibility program to support local communities, including providing school supplies, drinking water treatment, generators and fuel enabling 24 hour electricity for nearby villages, mobile medical units, and youth sports facilities, as well as financial support for 1,000 orphans from the Chemchemal area in partnership with the Barzani Charity Foundation. These initiatives are assisting the local communities in improving their standard of living, health, well-being, security and stability and the development of human capital in the Kurdistan Region.
Please click on the following link to access the report:
ENDS
The Board of Directors of Dana Gas PJSC is pleased to invite its esteemed Shareholders to attend the Company’s Annual General Assembly Meeting for the Financial Year ended 31 December 2015 which will be convened on Saturday 23 April 2016 at 11 AM, at the Sharjah Chamber of Commerce & Industry.
The Agenda of the Meeting is to consider and approve:
Notes:
DANA GAS 2015 AUDITED ANNUAL ACCOUNTS
23 March 2016
Sharjah, UAE
Following publication of the Preliminary Results on 14 February 2016, Dana Gas PJSC (“Dana Gas” or the “Company”), the Middle East’s leading publicly listed natural gas company, today published its audited financial results for the year ended 31 December 2015.
The key highlights for 2015 were previously reported in the Preliminary Results on 14 February 2016. The following is an excerpt of the Preliminary Results announcement:
Key highlights for 2015 include:
– Net profit $144 million (AED528 million) despite lower oil prices
– Cash and bank balance at $470 million (AED1.7 billion) at year-end 2015
– Increase in oil and gas reserves and decline in Egypt receivables
– Total assets up by 8%; positive outcomes in arbitration cases
The Company’s full year net profit increased 15% to $144 million (AED528 million), compared to $125 million (AED457 million) in 2014. The Company reported Gross Revenues and Gross Profit of $417 million (AED1.5 billion) and $126 million (AED463 million) respectively, down from $683 million (AED2.5 billion) and $303 million (AED1.1 billion) for the full year 2014. The fall in revenue and gross profit was directly attributable to the sharp decline in world oil prices last year, as well as a 15% production decline in Egypt.
The Company’s year-end cash and bank balance stood at $470 million (AED1.7 billion), up from $184 million (AED674 million) at end 2014. The key contributor to this increase was the cash received from RWE in November in consideration of the agreed settlement of the arbitration and sale of 5% interest in Pearl Petroleum Company Limited (PPCL or the Consortium). This offset a declining cash position caused by continued deficient payments from Kurdistan in combination with ongoing overhead costs and investment requirements in Egypt and the UAE.
During the year the Company also significantly increased its oil & gas reserves. Gaffney Cline & Associates has certified Dana Gas’s Proved Reserves in Egypt at 83 MMboe, an increase of 41%. In addition Proved plus Probable (2P) reserves of Dana Gas Egypt increased to 130 MMboe corresponding to a reserve replacement ratio (RRR) of 237%. The Zora Field 2P reserves remained steady at 31 MMboe.
The Company believes that total in-place gas and oil resources in the Khor Mor and Chemchemal Fields are significant. PPCL’s latest estimate (P50) of total risked in-place resources amount to 75 Tcf of gas and 7 billion barrels of oil. Based upon production data from only 1 of the 12 defined compartments in the Khor Mor Field, the current remaining Proven plus Probable (2P) reserves are believed to be at least 9 Tcf. The Company’s 35% share equates to 525 MMboe.
The Company ended the year with an average total production of 63,900 barrels of oil equivalent per day (boepd), a 7% decrease compared to 68,900 boepd at end 2014, although production in Kurdistan saw an increase of 800 boepd (3%) of production.”
The assessment of the hydrocarbon resources in both the Company’s fields in Kurdistan is currently under review by PPCL’s appointed external independent petroleum consultant and its audited figures, and Company’s share of reserves and resources, were expected to be included with the final financial results. However the final results are still being reviewed and the figures are expected to be disclosed shortly.
The 2015 Annual Accounts demonstrate an improvement in the Company’s year-end financial position following the amicable settlement with RWE. The Company monitors its capital requirements on an ongoing basis to ensure an optimal structure. Optimization measures may include the Company seeking, from time to time, to buy back its outstanding Sukuk. At the current time the Company has not yet determined the size of a buyback, if any, however going forward it will be considering a buy back, through open market purchases or otherwise in accordance with law, the scale of which will depend on market conditions and the Company’s liquidity requirements.
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 an average output of 63,900 boepd, in 2015. With sizeable assets in Egypt, KRI and the UAE, 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.
DANA GAS COMMENCES PRODUCTION FROM THE ZORA GAS FIELD IN THE U.A.E.
Sharjah, UAE
02 March 2016
Dana Gas, the Middle East’s leading regional private sector natural gas company, is pleased to announce that sales gas production commenced on 28th February 2016 from the Zora Gas Field. Initial project startup was achieved on 14th January 2016 with early gas supplies being intermittent as the gas plant was being fully commissioned. Subsequently sales production was delayed due to urgent maintenance work on gas supply infrastructure at the customer’s receiving facilities.
The Zora Gas Field is located in the Sharjah Western Offshore Concession, approximately 35 kilometers off the coasts of Sharjah and Ajman in the U.A.E. The Concession covers a total area of over 1000 km2straddling the maritime waters of Sharjah and Ajman. Dana Gas is the operator with a 100% interest, and will manage the field and the gas sales and purchase agreements. The gas is being transported through a subsea pipeline to a newly built onshore gas processing facility constructed by Dana Gas and located in the Hamriyah Free zone in Sharjah.
The field is expected to achieve a flow rate of 40 million cubic feet a day (6,650 barrels of oil equivalent). Natural gas from the Zora field will be sold for use in power generation in the domestic market, thus delivering a clean source of energy to the Emirate of Sharjah, as well as cost savings from displacing part of the current sources, which include diesel fuel. The project achieved an excellent safety record of over two million man-hours without lost time incidents.
Dr Patrick Allman-Ward, CEO, Dana Gas, said:
“Zora is our first development project in the U.A.E, and as such, represents a significant milestone in the Company’s 10 year history. The project represents a considerable investment by Dana Gas and the resulting gas output will support clean, domestic power generation for Sharjah for years to come. I would like to take this moment, on behalf of everyone here at the Company, to thank the Governments of Sharjah and Ajman, the Regulatory Authorities, all the contractors and the financing banks for their support in enabling this project to come to fruition.
Despite a very tough business environment, Dana Gas is entering into a new and exciting phase of its development. Our exploration and development activities in the U.A.E. and in Egypt will provide a short to medium term boost to our overall production levels and thereby help to offset the decrease in revenue and profits resulting from the current low oil price environment. We are also operating and producing in three countries and territories for the first time in our history, namely Egypt, Kurdistan and now the U.A.E. in keeping with our strategy of diversifying our asset portfolio.”
—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 an average output of 63,900 boepd, in 2015.. With sizeable assets in Egypt, KRI and the UAE, and further plans for expansion, Dana Gas aims to play an important role in the rapidly growing natural gas sector of the Middle East, North Africa and South Asia (MENASA) region.
Key highlights for 2015 include:
14 February 2016
Sharjah, UAE
Dana Gas PJSC (“Dana Gas” or the “Company”), the Middle East’s leading publicly listed natural gas company, today reported its preliminary unaudited financial results for the year ended 31 December 2015.
The Company’s full year net profit increased 15% to $144 million (AED528 million), compared to $125 million (AED457 million) in 2014. The Company reported Gross Revenues and Gross Profit of $417 million (AED1.5 billion) and $126 million (AED463 million) respectively, down from $683 million (AED2.5 billion) and $303 million (AED1.1 billion) for the full year 2014. The fall in revenue and gross profit was directly attributable to the sharp decline in world oil prices last year, as well as a 15% production decline in Egypt.
The Company’s year-end cash and bank balance stood at $470 million (AED1.7 billion), up from $184 million (AED674 million) at end 2014. The key contributor to this increase was the cash received from RWE in November in consideration of the agreed settlement of the arbitration and sale of 5% interest in Pearl Petroleum Company Limited (PPCL or the Consortium). This offset a declining cash position caused by continued deficient payments from Kurdistan in combination with ongoing overhead costs and investment requirements in Egypt and the UAE.
During the year the Company also significantly increased its oil & gas reserves. Gaffney Cline & Associates has certified Dana Gas’s Proved Reserves in Egypt at 83 MMboe, an increase of 41%. In addition Proved plus Probable (2P) reserves of Dana Gas Egypt increased to 130 MMboe corresponding to a reserve replacement ratio (RRR) of 237%. The Zora Field 2P reserves remained steady at 31 MMboe.
The Company believes that total in-place gas and oil resources in the Khor Mor and Chemchemal Fields are significant. PPCL’s latest estimate (P50) of total risked in-place resources amount to 75 Tcf of gas and 7 billion barrels of oil. Based upon production data from only 1 of the 12 defined compartments in the Khor Mor Field, the current remaining Proven plus Probable (2P) reserves are believed to be at least 9 Tcf. The Company’s 35% share equates to 525 MMboe.
The assessment of the hydrocarbon resources in both fields is currently under review by PPCL’s appointed external independent petroleum consultant and its audited figures, and Company’s share of reserves and resources, will be disclosed with the final financial results.
The Company ended the year with an average total production of 63,900 barrels of oil equivalent per day (boepd), a 7% decrease compared to 68,900 boepd at end 2014, although production in Kurdistan saw an increase of 800 boepd (3%) of production.
Dr Patrick Allman-Ward, Dana Gas CEO commented:
“Despite the challenging business environment with the fall in oil prices, Dana Gas is pleased to report healthy financial results including higher net profit, a significantly improved reserves position and positive outcomes in our arbitration cases. We have made solid progress in further cutting costs, increasing operational efficiencies and bringing on-stream new fields in the UAE and Egypt, and have strengthened our management team during the course of the year with the appointment of a new Technical Director and Chief Financial Officer.
Looking ahead we expect to see increases in production levels and resulting cash flows, particularly in Egypt and also in the UAE with the anticipated start-up of the Zora Field. Together with our overall reduced spending levels and healthy cash position this means that Dana Gas is well positioned to face the challenges of the current lower oil price environment and is prepared for the future upturn.”
RECEIVABLES AND COLLECTIONS
The Company received $125 million (AED458 million) in cash and offset payments from the Egyptian Government, helping reduce its trade receivable balance to $221 million (AED810 million), a 5% improvement on 2014. In the Kurdistan Region of Iraq (KRI), Dana Gas’s share of collections was $43 million (AED158 million) in contrast to $34 million (AED125 million) in 2014 and its share of the trade receivable balance was $727 million (AED2.6 billion).
CAPITAL EXPENDITURE
Over the course of the year, Dana Gas’s capital expenditure was $234 million (AED858 million), a 92% increase year-on-year. The Company invested $150 million (AED550 million) on the Zora Gas Field Development Project in UAE and $ 84 million (AED308 million) on the GPEA capital investment program in Egypt.
PRODUCTION & DEVELOPMENT
Egypt
Dana Gas Egypt recorded full year production of 33,900 boepd as compared to 39,900 boepd in 2014. This 15% drop in production in Egypt is consistent with normal field declines. In the second half of 2015, the successful Balsam-2 and -3 wells added 165 Bcf to the field’s proven and probable reserves, bringing gas initially in place to approximately 391 Bcf (67 MMboe) across the entire Balsam concession. The Balsam-2 well came on stream in late 2015 and along with Balsam-1 and Balsam-3, which was brought on stream six months ahead of schedule, the Balsam Field is cumulatively producing 24 million standard cubic feet of gas a day (5,000 boepd including condensate) which has partly offset the natural field declines.
In May 2015, Dana Gas confirmed it completed an agreement with BP for the drilling of the first exploration well in the Nile Delta’s El Matariya (Block 3) onshore Concession Area. Under the terms of the agreement, BP as operator will carry Dana Gas for its 50% share of the cost of the well, subject to an agreed cap of $39 million.
Kurdistan Region of Iraq
In Iraq’s Kurdistan Region the plant operations continued at plateau levels through the year. Dana Gas’s share of gross production in the KRI was 29,300 boepd, an increase of 3% on 28,500 boepd in 2014 related to further process optimization and improvements.
United Arab Emirates
In 2015, Dana Gas completed the construction of the platform, plant and pipeline for the Zora Gas Field. Dana Gas, as operator with a 100% interest, will manage the field, gas sales and purchase agreements. The gas is being transported through a subsea pipeline to a newly built onshore gas processing facility by Dana Gas located in the Hamriyah Free Zone in Sharjah.
Production started in January 2016 and process optimization is currently underway. The field is expected to achieve a flow rate of 40 million cubic feet a day. Natural gas from the Zora Gas field will be sold for use in power generation in the domestic market, thus delivering a clean source of energy to the Emirate of Sharjah, as well as cost savings from replacing some of the current feedstock that include diesel fuel. The build project achieved an excellent safety record of over two million man-hours without lost time incidents.
ARBITRATIONS
Kurdistan Region of Iraq
On 27 November 2015 the Tribunal of the London Court of International Arbitration (LCIA) issued a Second Partial Final Award ordering the KRG to pay PPCL the sum of $1.963 billion for outstanding unpaid invoices for the produced condensate and LPG up to 30 June 2015. The Award is final, binding and internationally enforceable, it does not depend on further claims or counter-claims by the parties to the arbitration. No monies have yet been paid by the KRG to date in respect of the Award. Further damage claims by the Consortium and counter-claims by the KRG will be heard and determined at a final two week hearing now fixed for early September 2016.
On 5 February 2016, the English High Court also affirmed its decision to enforce the earlier LCIA Arbitral Tribunal’s Peremptory Order of 17 October 2014 to pay the Consortium $100 million before 26 February 2016, on condition that the KRG pay three installments of $8 million each by 31 December 2015, 15 January and 19 February 2016. The KRG has appealed the decision, though the first two of the three installments have already now been received by the Consortium.
RWE
In December 2010, Dana Gas PJSC and Crescent Petroleum Company International Limited initiated arbitration proceedings against RWEST’s alleged breach of certain confidentiality agreements between the parties. As was previously announced on 27 November, the parties reached a mutually satisfactory and confidential settlement that included a 10% participation by RWE in the Pearl Consortium. As part of the settlement, Dana transferred an equity interest of 5% in PPCL to RWEST Middle East Holdings BV, and so Dana Gas’ shareholding in PPCL is now 35%. The other 5% was transferred by Crescent Petroleum.
UAE Gas Project
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 Arbitration Tribunal had issued a Final Award on the merits determining that the contract between it and NIOC was valid and binding upon the partied, and that NIOC has been obligated to deliver the gas under the contract since December 2005. Crescent Petroleum has since informed Dana Gas that the final hearing for determination of the damage claims against NIOC for non-performance of the contract has now been fixed by the Tribunal for the 1st September 2016 in The Hague.
—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 an average output of 63,900 boepd, in 2015. With sizeable assets in Egypt, KRI and the UAE, 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.
Dana Gas PJSC (“Dana Gas” or the “Company”), the Middle East’s leading publicly listed natural gas company, has announced the following key senior management appointments.
Chris Hearne was appointed as the Chief Financial Officer of the Company on 4 January 2016. Prior to joining Dana Gas, Mr Hearne was with Serica Energy plc, an international oil exploration and production company listed on the AIM market in London, where he served as Chief Financial Officer and Director from 2005. Mr Hearne has over 20 years’ experience within the oil industry having been CFO and Senior Vice President of Erin Energy, a NYSE listed company with oil assets across Africa, and with Intrepid Energy North Sea Limited.
Mr Hearne was originally an investment banker and has wide experience of corporate finance transactions, including capital markets and M&A, with 10 years with Lehman Brothers International and Robert Fleming & Co.
The Company also appointed Iman Hill as Technical Director in September 2015. Ms Hill additionally holds the positions of General Manager for the UAE and Egypt and is currently responsible for delivering the Zora Gas Field project and the GPEA drilling program in both countries, respectively. Prior to joining Dana Gas, Ms Hill held the position of Vice President Development and Production Africa for Sasol E&P International. Ms Hill has 30 years of experience in the oil and gas industry across numerous geographies, including the MENA region, Africa, Latin America and the Far East. She has worked as Managing Director and Chairwoman of Shell Egypt, and Senior Vice President for Brazil with BG Group. She has previously served as a Non-Executive Board Director of Outokumpu, Europe’s largest steel company. Ms Hill is a Petroleum Engineer and is a fluent Arabic speaker.
Separately, Duncan Maclean has been appointed to the position of Legal and Commercial Director of the Company. Mr Maclean joined the Company in March 2014 as the Commercial and Business Development Director. Previously, Mr Maclean was a partner with the global law firm of Squire Patten Boggs based in Perth, Australia, and was the Co-Chair of the firm’s global energy and resources group. Mr Maclean is admitted to the Supreme Courts of Western Australia, South Australia, the Northern Territory and the High Court of Australia. He has over 20 years’ extensive experience of practicing international energy law.
Commenting on the appointments, Dr Patrick Allman-Ward, CEO of Dana Gas, said:
“We are delighted that Chris Hearne has joined Dana Gas. His record of accomplishment at Intrepid and Serica and his wealth of experience in corporate finance and capital markets will be a real asset to the Company and shareholders alike. Chris’s appointment completes a triumvirate of key leadership positions, with Iman Hill joining as Technical Director and General Manager for UAE and Egypt in September 2015 and Duncan Maclean’s appointment to Legal and Commercial Director with effect from the 1st December 2015.
“We look forward to leveraging their collective experience in the oil and gas sector to drive our plans for growth in 2016 and beyond. We have an exciting mix of exploration programmes in Egypt and significant development projects, the Gas Production Enhancement Agreement in Egypt and the Zora Gas Field project in the UAE. Chris, Iman and Duncan will be key in supporting me and the rest of the team to ensure the successful delivery of these projects, especially during this period of global economic and oil price uncertainty.”
—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 an average output of 60,800 boepd, as of Q3 2015. With sizeable assets in Egypt, KRI and the UAE, and further plans for expansion, Dana Gas aims to play an important role in the rapidly growing natural gas sector of the Middle East, North Africa and South Asia (MENASA) region.