Adnoc Distribution’s 3Q net income holds at AED 818 mn as inventory gains fade + Dana Gas rises 50% on higher output

Adnoc Distribution’s 3Q net income was flat y-o-y at AED 818 mn, as the inventory gains that inflated its 1H earnings dried up. Rising oil prices handed the company AED 762 mn in gains on fuel held in stock in 1H, but it booked none in 3Q, according to its management discussion and analysis report (pdf).

Higher pump prices lifted revenue by 39.1% y-o-y to nearly AED 13 bn during the quarter, mostly on higher selling prices. Adnoc Distribution earns a fixed margin per liter on much of its fuel retail business, so pricier fuel swells sales far faster than income. Gross income rose 4.2% to AED 1.9 bn.

Fuel still makes up the bulk of sales, but non-fuel is where income grew fastest. Fuel retail revenue rose 36.1% to AED 8 bn in 3Q, c. 62% of the total. Non-fuel retail — from convenience stores, car care, and rentals — brought in just AED 490 mn of revenue. It still contributed AED 275 mn of gross income, up 12.9% y-o-y, making up c. 15% of the company’s total.

Over 9M, net income rose 36.6% y-o-y to AED 2.9 bn on AED 35 bn in revenue, helped by AED 762 mn in inventory gains, up from AED 234 mn a year earlier. Aviation was the fastest-growing line, with its revenue nearly doubling to AED 2.4 bn as volumes rose 49.3%, though gross income from the business inched up just 2.3%.

Output does the lifting

Higher production and realized hydrocarbon prices lifted Dana Gas’ 3Q net income 50% y-o-y to AED 165 mn, while its revenue rose 42% to AED 436 mn, according to the company’s earnings release (pdf). The bottom-line growth tracked a 17% increase in group production to 61.4k barrels of oil equivalent per day during the quarter.

9M in picture: On a 9M basis, revenue climbed 48% y-o-y to AED 1.38 bn, while net income rose 48% to AED 558 mn. However, excluding a one-off metering reconciliation of AED 176 mn, the firm’s bottom line was broadly flat, inching up around AED 3 mn. Daily production averaged 55.8k barrels of oil equivalent, up 6%.

Expansion starts paying: The energy producer rode a wave of stronger oil prices and higher production across Egypt and Iraq’s Kurdistan region. Higher utilization at Iraq’s Khor Mor gas field boosted results, as did six new wells and three recompletions in Egypt, which added 50 bn cubic feet of resources and 35 mn scf / d in production.

More on the way: “We hope to utilize our full production capacity in the coming months,” Mohammed Mubaideen, the company’s head of investor relations, told CNBC Arabia. Dana Gas currently produces about 570 mmcf / d of gas against an installed capacity of 750 mmcf / d, he said, with regional conditions limiting utilization at Khor Mor. Dana Gas has also recently inked a supply agreement with Iraq’s federal electricity ministry expanding its customer base beyond the Kurdistan Regional Government.