Dana Gas Q1 2025 presentation: Net profit up 13% despite revenue decline

Published 19/05/2025, 12:32
Dana Gas Q1 2025 presentation: Net profit up 13% despite revenue decline

Introduction & Market Context

Dana Gas (ADX:DANA) reported a 13% year-over-year increase in net profit for Q1 2025, despite facing lower production volumes and softer oil prices. The Middle East-focused energy company presented its quarterly results on May 8, 2025, highlighting its strategic investments in the Kurdistan Region of Iraq (KRI) and Egypt, as well as its strong cash position and dividend resumption.

The company’s stock closed at 0.795 on May 16, 2025, up 0.69% for the day, reflecting investor confidence in Dana Gas’s growth strategy despite challenging market conditions.

Quarterly Performance Highlights

Dana Gas reported a net profit of $43 million for Q1 2025, up 13% from $38 million in the same period last year. This profit growth came despite a 6% year-over-year decline in revenue, which fell to $91 million from $97 million in Q1 2024.

The company’s EBITDA reached $58 million, down 5% compared to Q1 2024, while gross profit remained relatively stable at $48 million compared to $47 million in the prior-year quarter.

As shown in the following chart of profit metrics over recent quarters:

The profit growth was primarily driven by stronger gas pricing in Egypt following the implementation of a Consolidated Concession Agreement, lower depreciation, depletion, and amortization charges, and reduced finance and operating costs.

Dana Gas maintained its cost efficiency, with operating expenses and general and administrative costs at $3.6 per barrel of oil equivalent (boe), which the company notes remains within the industry’s top quartile.

Operational Updates

The company’s average group production declined to 52,200 barrels of oil equivalent per day (boepd) in Q1 2025, compared to 56,750 boepd in Q1 2024. This decrease was primarily due to lower production in Egypt, which fell 31% year-over-year to 12,550 boepd as a result of natural field declines and planned maintenance activities.

However, production in the KRI increased by 3% year-over-year to 39,650 boepd, reflecting continued demand for gas in power generation. The company noted that the Khor Mor field surpassed 500 million barrels of oil equivalent in cumulative production, with daily gas output reaching 525 million standard cubic feet per day (MMscf/d), representing a 75% increase since 2017.

The following chart illustrates the production breakdown by region and product type:

In Egypt, despite lower production volumes, the company benefited from improved realized gas pricing following the new terms of the Consolidated Concession Agreement. Dana Gas has committed to a $100 million investment over two years to drill 11 wells (3 in 2025 and 8 in 2026), with drilling operations for the first well set to begin in May 2025.

The company’s realized prices for condensate averaged $43 per barrel in Q1 2025, compared to $44 per barrel in Q1 2024, while LPG prices averaged $34 per barrel of oil equivalent, down from $35 in the prior-year period. These prices reflect the broader market environment, with Brent crude averaging $76 per barrel in Q1 2025 compared to $83 per barrel in Q1 2024.

Strategic Initiatives

Dana Gas is making significant progress on its KM250 project in the KRI, which is now on track for early completion in Q1 2026. Once completed, the project will add 250 MMscf/d of new gas processing capacity, increasing Pearl Petroleum’s total output by 50%. The company expects this project to contribute over $150 million in annual cash flow (net to Dana Gas).

Additionally, Dana Gas has initiated the first phase of a $160 million investment plan for Chemchemal field development, one of Iraq’s largest undeveloped gas fields. This program includes drilling three wells and installing an extended well test facility, with production of up to 75 MMscf/d targeted for the second half of 2026.

In Egypt, the company’s investment program aims to increase gas recovery by 80 billion cubic feet and help stabilize production. Dana Gas notes that this additional gas will generate significant cost savings of over $1 billion for Egypt’s economy by reducing reliance on imported LNG and fuel oil.

The company’s capital expenditure for Q1 2025 was $19 million, slightly higher than the $17 million spent in Q1 2024, with $7 million allocated to Egypt and $12 million to the KRI.

Financial Position and Outlook

Dana Gas reported a strong cash position, with a balance of $373 million as of March 31, 2025, up from $317 million at the end of 2024. This includes $214 million held at the Pearl Petroleum joint venture.

The company collected $70 million in Q1 2025, with a 100% collection rate in the KRI ($58 million) and a 92% collection rate in Egypt ($12 million). Receivables stood at $67 million in the KRI (down 26% year-over-year) and $79 million in Egypt.

Total (EPA:TTEF) debt was $285 million, including $211 million of non-recourse project debt at Pearl Petroleum. The company secured a $50 million working capital debt facility in March 2025, which was partially used to fully pay down outstanding debt at the corporate level of $28 million in April 2025.

Shareholders approved a dividend of $105 million for FY 2024 at the April 2025 AGM, which will be paid in May 2025, demonstrating the company’s commitment to returning value to shareholders.

Looking ahead, Dana Gas provided this summary of its position and outlook:

With its strong cash position, strategic investments in both the KRI and Egypt, and focus on cost efficiency, Dana Gas appears well-positioned to continue its growth trajectory despite the challenges of natural field declines in Egypt and fluctuating commodity prices.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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