Dana Gas reports $38 million profit for first quarter of 2024

ERBIL, Kurdistan Region - The UAE-based Dana Gas on Wednesday reported a net profit of $38 million for the first quarter of 2024, a drop from the same period last year amid lower hydrocarbon prices and decreased production. 

Dana Gas “generated revenue of AED 356 million ($97m) and net profit of AED 139 million ($38m), marking a reduction versus Q1 2023 earnings of AED 183 million ($50m),” it said in a report. The decrease in revenue is attributed to lower hydrocarbon prices and a 10 percent decline in production compared to quarter one of 2023. 

Crescent Petroleum and its affiliate, Dana Gas, struck a deal with the Kurdistan Regional Government (KRG) in 2007 to develop the Region’s substantial gas resources. The company operates the Khor Mor field, a critical gas field in Sulaimani province’s Chamchamal district that was recently the target of a deadly drone strike. 

A drone strike on Khor Mor late last month killed four Yemeni nationals and injured eight other employees working to repair a condensate storage tank damaged by a previous attack. The strike temporarily halted gas production at the site and significantly disrupted the Kurdistan Region’s electricity.

“It saddens me greatly to report the tragic fatalities and injuries following an incident at our Khor Mor field. We express our deepest condolences to the families. The gas plant was temporarily taken offline as we sought commitments for additional security measures from the Governmental authorities before fully restoring production,” said Dana Gas CEO Richard Hall. 

As part of the deal with the KRG, Dana Gas also agreed to establish Kurdistan Gas City, a major new gas-utilization industrial complex to promote private sector investment. The company has developed its production capacity gradually to over 500 million standard cubic feet of gas per day. 

The drone strike “may potentially impact the completion schedule” of an expansion project currently in the works known as KM250, which is expected to significantly increase the production of gas at the site to 700 standard cubic feet per day, according to the UAE-based firm. 

“Prior to the incident, we realized profits during the quarter despite lower condensate prices and reduced output from Egypt. In the KRI [Kurdistan Region of Iraq] we posted strong production numbers as our plant continues to produce above the 500 MMscf/d level it had reached at the end of last year,” Hall said. 

He noted “significant” progress in receiving their entitlements from the KRG, attributed to a new payment mechanism in place since last year. 

In February, Dana Gas reported a net profit of $160 million for 2023, a 12 percent decline from 2022 - again attributed to lower hydrocarbon prices.

Following the drone strike, the Emirati company said it was engaged with Baghdad and Erbil to enhance security measures at the site. It resumed production on Friday after what it said were “decisive actions” by the Iraqi federal government and the KRG to strengthen defenses and tighten security at Khor Mor. 

On Thursday, KRG Electricity Minister Kamal Mohammad Salih told reporters that Baghdad is responsible for providing aerial protection of Khor Mor. “The KRG has not failed to provide ground protection, but when it comes to aerial protection, that is the responsibility of the federal government,” he said. 

However, Iraq’s oil minister on the same day responded that it is not their responsibility to protect the field. “Khor Mor is under the control of the Kurdistan Regional Government and it is their responsibility to protect it,” Hayyan Abdul Ghani told reporters in Baghdad. 

Attacks on Khor Mor have been blamed on Iran-backed Iraqi militias taking advantage of the site’s strategic and economic importance for the Kurdistan Region. The attacks have caused major power disruptions and hindered expansion projects at the site. 

In late January, a liquid storage tank in Khor Mor was struck by an explosive drone, causing a halt in gas production and a significant power outage in the Kurdistan Region.

The company warned at the time that attacks on Khor Mor directly impact the lives of the Kurdistan Region’s citizens.

Despite the security threats and repeated attacks, Dana Gas said in 2022 that they would be able to meet the Kurdistan Region’s full gas demands in about two years.