ADNOC Gas’ Q1 net income surges by 9% to $1.3bn

ADNOC Gas, the gas business of ADNOC Group, said its Q1 2023 net income rose by 9 per cent to $1.3bn on a pro forma basis, the company’s first quarterly results since its record-breaking initial public offering (IPO) in March 2023.

The Abu Dhabi-based firm said its net income for the quarter ended March 31 included a one-time tax benefit of $300m following its formation earlier this year.

ADNOC Gas’ revenues for the quarter dropped by 15 per cent $5.2bn, compared to pro forma adjusted revenue of $6.2bn for Q1 2022, impacted by the pricing environment. The firm said Brent crude oil prices, which are used for gas pricing, plunged nearly 24 per cent during the period under review.

However, the lower prices in lower prices and volumes in Q1 2023 were offset by the lower cost of raw gas supply. The company’s 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,” the company said in a bourse filing.

Free cash flow in the first three months of the year stood at $1.1bn compared to illustrative free cash flow of $1.4bn in the same period last year.

#ADNOCGas has delivered robust financial results for the first quarter of 2023. The company continues to execute its growth strategy to meet local & international long-term demand for natural gas – a key fuel for a responsible energy transition.#EnergyForLife

— ADNOC Group (@ADNOCGroup) May 11, 2023

“We continue to execute on the growth strategy communicated during our IPO, underpinned by anticipated upstream capacity expansion and product mix optimisation,” said Ahmed Alebri, CEO of ADNOC Gas. “We see long-term structural demand growth for natural gas as a critical fuel in the responsible.”

ADNOC Gas intends to pay a dividend of $1.62bn in the last quarter of the year and a further $1.62bn dividend will be paid in the second quarter of 2024.

Hence, the company plans to grow the annual target dividend amount from $3.25bn by a growth rate of 5 per cent per annum on a dividend per share basis over the period 2024-27.

ADNOC Gas’ growth strategy

Meanwhile, ADNOC Gas continues to capitalise on growing global demand for natural gas, as the company continues to grow its export business. The company delivered the first-ever LNG cargo to be shipped to Germany from the Middle East in February.

ADNOC Gas also signed a three-year agreement with TotalEnergies in May for the export of LNG from 2023 to 2025, cementing the company’s position as a reliable global supplier of natural gas.

“We see long-term structural demand growth for natural gas as a critical fuel in the responsible global energy transition and 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,” added Alebri.

The company has made significant progress on its five-year $14bn strategic and growth project portfolio, encompassing a range of projects integral to elevating the efficiency of operations and production output.

The key projects include further maximising ethane recovery and monetisation across operations, extending the gas pipeline network by more than 500km to better connect the Northern Emirates and construction of an additional greenfield gas processing facility.

The new facility is expected to add approximately 1.9 billion standard cubic feet per day processing capacity to ADNOC Gas’ processing operations by 2028 – at the earliest.

Earlier in May, ADNOC said its new low-carbon LNG growth project will move to the Al Ruwais Industrial City in Abu Dhabi instead of Fujairah. The new location offers significant synergies and existing infrastructure that will be leveraged to deliver project efficiencies and unlock additional value for the group.

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