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Falling oil prices reduce Dana Gas profit by 25%

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UAE energy company Dana Gas said net profit fell 25 percent to AED304 million ($83 million) in the first half of 2023, compared with AED407 million in the first half of 2022.

The average price of Brent fell 25 percent to $80 per barrel in the first six months, down from $107 per barrel in the first half of 2022. The profit decline was also a result of additional discounts on condensate sales in the Kurdistan region of Iraq (KRI).

Revenue for the first six months dropped 22 percent to AED814 million from AED1.04 billion a year earlier because of lower realised prices amid softening global oil and gas prices.

Realised prices averaged $56 per barrel for condensate and $37 per barrel of oil equivalent (boe) for LPG in the first half, compared with $87 per barrel and $44/boe, respectively, in the same period the year before.

The impact of lower realised prices on the company’s profitability was partially offset by a production increase in the KRI and a decline in operating costs of 15 percent.

Pearl Petroleum, a consortium majority-owned by Dana, recently received $101 million from the Kurdistan regional government despite the ongoing challenges within Iraq. It is in ongoing discussions with the Kurdistan regional government to settle outstanding receivables as soon as possible, the statement said.

Patrick Allman-Ward, CEO of Dana Gas, said: “The 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 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,” Allman-Ward added.

The company’s overall production averaged 59,800 boe per day in the first half 2023, a two percent year-on-year decrease from 61,100 boe per day, as a decline in Egyptian production outweighed an increase in the KRI.

Dana Gas’s cash position stood at AED370 million in H1 2023, including AED 301 million held at the Pearl Petroleum joint venture.

In May, Dana Gas received regulatory approval to increase foreign ownership. Foreigners can now hold up to 100 percent of Dana Gas’ shares, up from 49 percent.

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