Sharjah 24 – WAM: ADNOC Gas plc announced its first quarterly financial results since its formation and initial public offering (IPO) for the three months ended March 31, 2023 (Q1 2023).
The company's unaudited pro forma financial results for the comparative period (the three-month period ended March 31, 2022 (Q1 2022)) noted herein are reported on a Pro Forma Adjusted basis.
Q1 2023 revenue stood at a robust $5.2 billion, compared to Pro Forma Adjusted Revenue of $6.2 billion for Q1 2022, impacted by the pricing environment. ADNOC Gas maintained high levels of reliability throughout Q1 2023, with an average reliability of 98.5% across its facilities.
The company is a predictable and resilient margin business underpinned by profitable growth opportunities. During the reporting period, Brent crude oil prices, used for gas pricing, declined nearly 24% compared to Q1 2022. ADNOC Gas demonstrated resilience in this challenging pricing environment, maintaining a robust EBITDA margin of 34% in Q1 2023, only 1% lower than in Q1 2022.
The Company used the prevailing market conditions to proceed with several planned asset maintenance activities. These activities enhance the safety and reliability of its facilities and contribute to continued world-class asset reliability and availability. All planned activities were completed on time and within budget, positioning the Company for higher volumes in the second quarter.
In Q1 2023, lower prices and volumes were offset by the lower cost of raw gas supply. ADNOC Gas’ long-term gas supply agreement provides reliable access to production from ADNOC’s upstream operations. The agreement permits ADNOC Gas to share in any price upside and provides downward protection in a lower-price environment.
ADNOC Gas continues to capitalise on the growing global demand for natural gas and remains focused on increasing production capacity and driving operational efficiencies. As the Company continues to grow its export business, the first-ever LNG cargo to be shipped to Germany from the Middle East was delivered in February from Abu Dhabi to the Elbehafen floating LNG terminal in Brunsbüttel.
In a post-period event, ADNOC Gas announced in early May the signing of a three-year agreement with TotalEnergies, a multinational energy company, to export LNG from 2023 to 2025. This agreement reinforces ADNOC Gas’ position as a reliable global supplier of natural gas.
Net Income for Q1 2023 was $1.3 billion versus Pro Forma Adjusted Net Income of $1.2 billion in Q1 2022. Net Income for Q1 2023 included a $300 million benefit from recognising a deferred tax asset, a non-reoccurring item, following the formation of the Company. Free Cash Flow in Q1 2023 stood at $1.1 billion compared to illustrative Free Cash Flow of $1.4 billion in Q1 2022.
Ahmed Alebri, Chief Executive Officer of ADNOC Gas, commented, “ADNOC Gas has delivered robust financial results during Q1 2023, despite a significant contraction in market prices from the near-all-time highs experienced during 2022. Our performance during this period demonstrates our resilience and ability to generate attractive returns. We maintained a solid operating margin thanks to our ongoing focus on operational excellence and cost optimisation and reported healthy Net Income of $1.3 billion.
"Importantly, we continue to execute on the growth strategy communicated during our IPO, underpinned by anticipated upstream capacity expansion and product mix optimization. We see long-term structural demand growth for natural gas as a critical fuel in the responsible global energy transition. We are ideally positioned to meet both local and international demand, while further decarbonising our operations in line with the UAE’s Net-Zero 2050 ambition.”
The Company is making good progress on its five-year (2023 to 2027) $14 billion strategic and growth project portfolio, encompassing a range of projects integral to elevating the efficiency of operations and production output.
Key projects include further maximising ethane recovery and monetisation (MERAM) across operations, extending the gas pipeline network by more than 500 kilometres to better connect the Northern Emirates of the UAE (ESTIDAMA), and the construction of an additional greenfield gas processing facility, co-located with a significant ADNOC upstream reservoir. The new facility is expected to add approximately 1.9 Billion Standard Cubic Feet Per Day (bscfd) processing capacity to ADNOC Gas’ processing operations by 2028, at the earliest (Bab Gas Cap).
ADNOC Gas is targeting to pay a dividend of $1.625 billion in the fourth quarter of 2023 in respect of the first half of 2023. A further $1.625 billion dividend is targeted to be paid in the second quarter of 2024 in respect of the second half of 2023. Thereafter, ADNOC Gas expects to grow the annual target dividend amount from $3.25 billion by a growth rate of 5% per annum on a dividend-per-share basis over 2024-27.
The targeted growth in dividends reflects ADNOC Gas’ strong and visible future cash flows, which provide ample headroom to invest in long-term future growth and provide stable returns for shareholders.
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