Adnoc Gas net profit during first quarter increases by 9% on cost optimisation
Adnoc Gas, the integrated gas processing unit of Adnoc, reported a 9 per cent annual increase in its first-quarter net profit as it optimised costs and maintained robust margins despite a sharp slide in hydrocarbon prices.
Net income for the three months to the end of March rose to $1.3 billion, compared with a pro forma adjusted net profit of $1.2 billion recorded during the same period last year, the company said in a filing to the Abu Dhabi Securities Exchange, where its shares are traded. The company’s quarterly revenue of $5.2 billion was lower than the pro forma adjusted $6.2 billion at the end of the first three months of 2022, due to the weak hydrocarbon pricing environment.
But the company remains “a predictable and resilient margin business underpinned by profitable growth opportunities”, Adnoc Gas said.
The price of Brent, the benchmark for two thirds of the world’s oil, which is also used for gas pricing, declined by about 24 per cent on an annual basis, during the reporting period.
Adnoc Gas maintained its resilience despite a challenging environment and recorded an earnings margin of 34 per cent before interest, taxes, depreciation and amortisation.
“Our performance during this period demonstrates our resilience and ability to generate attractive returns,” said its chief executive Ahmed Alebri.
“We maintained a solid operating margin thanks to our ongoing focus on operational excellence and cost optimisation.”
Adnoc Gas, which listed shares on the ADX in March, said it had used the prevailing market conditions to complete several planned maintenance activities that had positioned the company for higher volumes in the second quarter.
Lower prices and volumes during the first quarter were also offset by the lower supply cost of raw gas.
Adnoc Gas has a long-term supply agreement in place that provides it with reliable access to gas from its parent company Adnoc’s upstream operations. “The agreement permits Adnoc Gas to share in any price upside and provides downward protection in a lower price environment,” the company said.
Despite tough market conditions, Adnoc Gas aims to keep capitalising on growing global demand for natural gas and remain focused on increasing production capacity and driving operational efficiencies, it said.
The company is expanding its export business and delivered the first liquefied natural gas cargo from the Middle East to Germany in February this year. The company also announced the signing of a three-year agreement with TotalEnergies this month for the export of LNG from 2023 to 2025.
Adnoc Gas said it was making progress on its $14 billion five-year strategic growth plan aimed at increasing the efficiency of operations and production output.
Key projects include efforts to maximise ethane recovery and monetisation across operations, plans to extend the gas pipeline network by more than 500km and the construction of an additional greenfield gas processing complex in the same location as a significant Adnoc upstream reservoir.
The planned complex is expected to add about 1.9 billion standard cubic feet per day of capacity to the processing operations of Adnoc Gas by 2028, the company said.
“We continue to execute on the growth strategy communicated during our IPO [initial public offering], underpinned by anticipated upstream capacity expansion and product mix optimisation,” Mr Alebri said.
Adnoc raised about $2.5 billion from the sale of a 5 per cent stake in the gas business, making it the largest listing on the Abu Dhabi bourse, surpassing that of Borouge, which went public in June last year and raised $2 billion.
The quarterly net income rose to $1.3bn, compared with a pro forma adjusted net profit of $1.2bn in the first-quarter of last year