Group recognises non-cash impairment of AED894 mn
Following the sharp decline in oil prices and associated negative economic effects as a result of the Covid 19 pandemic, the Group recognised a non-cash impairment of $244 million (AED894 million) in respect of Egyptian assets and a further impairment of $163 million (AED597 million) in respect of goodwill following sale of the company’s onshore assets in Egypt.
On an adjusted basis, excluding the impairments in 2020 and exceptional other income recognised in 2019, the Group made a profit of $36 million (AED131 million) as compared with a corresponding year profit of $88 million (AED322 million).
Net profit from continued operations during the year was $32 million (AED118 million), which reflects the strong underlying operating performance despite sharp decline in oil prices
Revenue too down
During the year, the Group earned gross revenues of $349 million (AED1.27 billion) as compared with $459 million (AED1.68 billion) in 2019, a decrease of 24 per cent due to lower realised prices and lower levels of production in Egypt. This decline was partly offset by production increase in Kurdistan in third quarter (Q3) following completion of the bypass project.
Realised price averaged $28/barrel for condensate and $28/boe for LPG compared with $49/barrel and $30/boe respectively in 2019 and this has negatively impacted revenues by $88 million.
The group ended the year with an average production of 63,200 barrels of oil equivalent per day (boepd), a decrease of 5 per cent compared with last year’s production of 66,200 boepd.
Dana Gas was incorporates in the Emirate of Sharjah as a public joint stock company on November 20, 2005. Dana Gas is the Middle East’s first and largest private sector natural gas company.
The group currently operates in the Middle East, North Africa & South Asia (MENASA) region across the natural gas value chain, from exploration and production, through gas processing and transportation, to the distribution, marketing and utilities of gas as feedstock and fuel to the petrochemical, industrial and the power sectors.
Since its establishment, the company has grown to be a regional natural gas company with presence in the UAE, Egypt and the Kurdistan Region of Iraq (KRI) with headquarters in Sharjah.
The company announced on October 25 that it has entered into a binding agreement with IPR Wastani Petroleum Ltd, a member of IPR Energy Group (IPR) for the sale of its onshore Egyptian producing oil and gas assets for a consideration of up to $236 million including contingent payments.
Under the terms of the sale, the consideration comprises 1) a base cash consideration of $153 million including the net working capital associated with the assets and before any closing adjustments, and 2) contingent payments of up to $83 million subject to average Brent prices and production performances between 2020 and 2023 as well as realisation of potential third party business opportunities.
“Upon closing, the base consideration will be adjusted by the collections received and payments made by the company during the intervening period between the economic date and the closing date,” the company statement said.
In line with its outlined strategy, the Dana Gas Group continues to focus on maximising the value of its existing hydrocarbon assets and projects while pursuing growth through a strategy of organic exploration opportunities in the heartland areas and new business development in the upstream and midstream value chains.
“We continue to balance our capital expenditure with the available sources of cash to ensure we maintain a robust position,” the company added.
UAE Gas Project
The UAE Gas Project to process and transport imported gas continues to await the commencement of gas supplies from the National Iranian Oil Company (NIOC) to Crescent Petroleum. Dana Gas has a 35 per cent interest in Crescent National Gas Corporation Ltd (CNGCL), which is entitled to market the gas and owns 100 per cent of Saj Gas and UGTC, the entities that own the offshore riser platform, the offshore and onshore pipelines and the sour gas processing plant to transport and process the gas.