Mubasher TV
Contact Us Advertising   العربية

Dana Gas Q3 profit rises 36%

Dana Gas Q3 profit rises 36%
Dana Gas
DANA
0.31% 0.65 0.00
Dana Gas announced 36% y-o-y growth and 18% q-o-q drop in earnings during the third quarter of 2014 to reach AED 139 million, missing consensus of AED 161 million by 14%. Revenues before royalties added 2% y-o-y and fell 7% q-o-q to AED 638 million, driven by 2.8% higher y-o-y production reaching 68,700 barrels of oil equivalent per day (boepd). Production in Kurdistan Region of Iraq (KRI) gained 2.2% y-o-y, reaching 27,700 boepd, while production from Egypt inched up 2.9% y-o-y to 40,500 boepd. Net revenues after royalties reached 1.9% higher y-o-y at AED 433 million during the third quarter of 2014.

The company announced noticeable improvement in cost management, with no details for the reasons behind it revealed yet, while gross margin widened to 62% during the third quarter of 2014 against 58% a year ago. EBITDA grew 10% y-o-y to AED 375 million, implying a wider margin of 59% compared to 55% during the third quarter of 2013.

Finance costs eased 18% y-o-y, driven by conversion of $72.93 million worth of convertible sukuk during the first nine months of 2014, while tax expense fell 12% y-o-y with effective tax rate improving to 27% against 36% during the third quarter of 2013, resulting in a higher earnings growth with an improved margin of 22% compared to 16% a year ago.

Moreover, Dana Gas trades at 2015e PER of 12.4x, an 11% discount to global peers' 14x. During the third quarter of 2014, Dana Gas marked positive achievements in terms of operations and liquidity management.

Worth noting, Dana Gas signed a Gas Production Enhancement Agreement (GPEA) with the Egyptian government in September 2014, ensuring the company long-term production growth and a significant reduction in receivables. The estimated incremental production according to the GPEA will be 270 billion cubic feet of natural gas, from eight to nine million barrels of condensate and around 450,000 tons of liquefied petroleum gas (LPD).

Financial proceeds from the direct sale of all of the incremental condensate in international markets at international prices will be retained by Dana Gas and will be used to reduce its outstanding receivables balance owed by the Egyptian government, which stood at $276 million at end of September 2014. The Company’s collection of dues from the Egyptian government amounted to $53 million during the quarter.

It is worth highlighting that Dana Gas won bidding for onshore Blocks 1 and 3 in the Nile Delta in September 2014.