Dana Gas Q3 profit $8.9m as costs fall
Dubai, November 10, 2010
UAE's Dana Gas returned to profit during the third quarter due to lower costs and increased production, but the results fell short of analysts' estimates.
Dana reported a net profit of Dh33 million ($8.98 million) in the third quarter due to higher writeoffs of unsuccessful gas wells, it said in a statement on Wednesday.
Last year Dana saw a loss of Dh79 million during the third quarter.
Four analysts on average had expected Dana to post a net profit of Dh40.35 million for the third quarter according to a Reuters poll.
The company's shares rose by 0.77 per cent on Wednesday.
Exploration costs during the third quarter this year were Dh15 million compared to Dh110 million during the same period last year, it said.
'This year out of eight wells in Egypt we found six producing ones and two were dry, which is a higher than average discovery rate,' Ahmed Al Arbeed, chief executive of Dana told Reuters.
Asked about the company's fourth quarter earnings, Arbeed said that the outlook was 'positive' and that a final decision on the farming out of 20 to 30 per cent of its Egypt assets will be made by the end of this year.
Overall Dana's oil and gas output increased by 24 per cent during the third quarter compared to the same time last year, it said.
Dana's operations in Egypt continue to deliver strong results, producing 3.9 million barrels of oil equivalent (boe) during third quarter this year, a 15 per cent increase compared to the same period last year. This included production from the Sharabas and Faraskur fields, which were brought on stream in August 2010 via the El Wastani gas plant, the statement added.
Dana also announced two new gas discoveries in the Nile Delta, Egypt. The first is West Ward Delta-1, which tested at 12.9 million standard cubic feet per day (MMscfpd) of gas from the Kafr El Sheikh formation, said the statement.
The preliminary estimate of mean recoverable reserves from this field is in the range of 10 billion to 17 billion standard cubic feet (Bcf) of gas, it added.
The second discovery is Salma Delta North-1 which tested at 16.1 MMscfpd plus 561 barrels per day of condensate.
In the Kurdistan Region of Iraq, Dana Gas produced 1.2 million boe of gas and condensate during the quarter, an increase of around 72 per cent over the same period in 2009, it said.
The first train of the liquefied petroleum gas (LPG) plant at the Khor Mor field is in partial operation, producing gas and condensate. Production of LPG is expected to start within the next few weeks which will further increase production.
'The production rate right now at Khor Mor is 200 million cubic feet (mcf) and by early next year we expect it to be 280 mcf, and once we meet the local demand we will start exporting gas,' said Arbeed giving no further details on when exports will start.
Last year, Dana said it was part of a UAE and European consortium that includes Austria's OMV and Hungary's MOL planning to pump enough gas from Iraq's Kurdistan region to kick-start the estimated $10 billion Nabucco pipeline project to supply Europe.
Dana's shares were unchanged at 0.8 dirhams a share on Abu Dhabi's bourse at 0653 GMT.-Reuters