Dana Gas full-year net profit falls to Dh88m

Sharjah-based Dana Gas, the Gulf's only listed natural gas company, expects to swing back to a net profit in the first quarter after reporting two consecutive quarterly losses amid write-offs and asset impairments.

Dana's full-year 2009 net profit fell to Dh88m from Dh120m in 2008, for a net loss of Dh193m in the quarter, according to Reuters calculations.

Comprehensive income – which includes gains on sale of investments – rose to Dh458m in the year compared with Dh120m one year earlier. Dana said the results exclude an unrealised gain of Dh370m recorded for its investment in Hungarian oil and gas firm MOL which was booked directly to equity.

Dana Gas posted a fourth quarter loss of Dh193 million, well short of analysts' forecasts, after 2009 accounting for write-offs and the impairment of some oil and gas assets.

The Abu Dhabi-listed firm said first quarter profit figures will benefit from higher production, a marked rise in oil prices and effective managing of costs.

The stock was flat at Dh0.91 on the Abu Dhabi stock Exchange yesterday.

"We are entering the first quarter with confidence. I expect Dana Gas to be delivering positive net profit after tax in Q1," Chief Financial Officer James Dewar said yesterday.

Separately, Dana's Egyptian unit is targeting a 20 per cent boost in oil and gas output this year and spending would be more than last year's $170m (Dh624m), the unit's president said.

"The level of impairments and write-offs in 2009 was unusual, but our balance sheet is robust," Dewar said. Dana wrote off a portion of the carrying values of its inventory and investment properties, mainly in Egypt, to reflect their current market price, he added.

"The impairment charges are from operations in Nigeria and Tunisia, but they are not significant assets and the market is not factoring these in. If it wasn't for these items, the company probably would have made a quarterly profit," said Hatem Alaa, HC senior research analyst in Cairo.

"We are still positive on the company's prospects."

In January, HC began coverage of Dana Gas with a "buy" rating, setting a price target of Dh1.43.

In its earnings statement Dana said the company will continue to pursue targeted acquisitions. CFO Dewar said the firm had earmarked $200m for the right "business opportunity" in 2010.

In May 2009, Dana said it was part of a UAE and European consortium that includes MOL and Austria's OMV planning to pump enough gas from Iraq's Kurdistan region to kick-start the estimated $10bn Nabucco pipeline project to supply Europe. As at December 31, 2009, Dana's investment in Kurdistan exceeded Dh1.2bn, its statement said.

 

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