Dana Gas, one of the region’s largest privately-owned gas companies, reported an eight per cent increase in net profits to Dh120 million last year, over 2007 profits.
Total revenues increased by 10 per cent year on year to Dh1.1 billion. The group’s cash and bank balances at the end of 2008 stood at Dh789 million, with 96 per cent of this held with local banks in the UAE.
The company’s profit growth figures come amid a general downturn in other sectors of the regional economy.
“We will continue to build on this important base in 2009, focusing on our core business area in the natural gas industry, which continues to show extremely strong fundamentals and growth opportunities& despite the slowdown in some other sectors.” said Hamid Jafar, Executive Chairman.
Last year, Dana Gas increased its gross gas production volumes by 50 per cent, largely due to the commencement of operations in the Kurdistan region of Iraq – a contract the company acquired in 2007.
Combined with the group’s continued presence in exploratory activities in Egypt, total production reached 220 million standard cubic feet per day, equivalent to more than 40,000 barrels of oil equivalent (boe) per day.
“We are on target to increase our production by over 70 per cent in the coming year, and the majority of our revenues are currently from fixed long-term contracts which also offers some protection from volatile oil prices”, said Jafar.
Owing to pre-determined long term contracts, Dana Gas is assured of a fixed price to sell its gas.
The company’s financial well-being was also bolstered through a $1 billion (Dh3.67 billion) Islamic fin-ance instrument (convertible Sukuk), which was secured in 2007, before credit opportunities tightened.
“We successfully raised a billion dollars at the end of 2007 by issue of our convertible sukuk and continue to maintain a healthy liquidity position, with no exposure to the market downturn in real estate or financial investments” said finance director, Neeraj Agrawal.
Opportunities for developing natural gas fields in the Middle East region are increasing, with governments keen to tap into reserves to fuel domestic energy needs.
“The UAE has 8 per cent or so of gas in the world, but most of it is very sour. More than 99 per cent of UAE’s domestic energy is sourced from natural gas and so they’re importing it.
“The government has already let out tenders to develop sour gas fields to sweeten the gas and make it acceptable for consumption” said Dalton Garis, Associate Professor of Economics and Market Behaviour at the Petroleum Institute in Abu Dhabi.
In 2009, Dana Gas is hoping to progress with a series of developments in the UAE.