Thank you, ladies and gentlemen, for joining us today for Dana Gas full year 2021 financial results conference call. I will now hand over to your host, Mr. Mohammed Mubaideen, Head of Investor Relations. Thank you.
Thank you. Welcome to the Dana Gas 2021 preliminary financial results call. Presenting today are our CEO, Dr. Patrick Allman-Ward and CFO, Chris Hearne. Please note that the presentation for today's call can be found on our website. I would like to draw your attention to our disclaimer on slide two, which we would encourage you to read carefully. After the presentation, there will be time for a Q&A session. I will now hand over the call to our CEO, Dr. Patrick Allman-Ward to begin.
Thank you, Mohammed, and thank you everyone for joining our call today. Dana Gas delivered its strongest financial performance in 2021, reporting record profitability, collections, and production in the KRI. Our performance has been supported by a welcome rebound in oil prices and our robust operational performance, reflecting our commitment to growing our production while maintaining a low cost base. The company's collections in 2021, $377 million in total, was the highest ever. This was the result of our positive engagements with our partner governments. The KRI government fully settled its overdue receivables for both 2019 and 2020, while in Egypt, an accelerated pace of payments reduced the level of receivables to the lowest level since we started our operations in the country in 2007.
The payment of past outstanding receivables further strengthened the balance sheet, allowing us to pay a record dividend payment of $172 million or AED 0.09 per share to Dana Gas shareholders in 2021. The latest dividend payment makes Dana Gas one of the highest yielding global oil and gas companies in the world, and on the ADX. Our share price also reached AED 1.27, its highest level since 2009. Supporting our operational performance was the conclusion of Crescent Petroleum's first arbitration against the National Iranian Oil Company, which resulted in a monetary award from the tribunal in September. The amount due to Dana Gas following this arbitration award was $608 million. A corresponding impairment of $360 million has been recorded against the book value of our UAE gas assets.
All told, our achievements last year represent a significant reversal of fortunes from 2020 when the lockdowns stemming from the global pandemic and a steep drop in oil prices put historic pressure on the oil and gas industry. Our success in navigating the challenges of 2020 is demonstrated in the solid set of financial metrics that we have produced for 2021, and which you can see on slide five. Net profit for the year was $317 million, as compared to a net loss of $376 million in 2020. Chris will later take you through the numbers in detail. Our production declined 2% during 2021 to 62,100 barrels of oil equivalent per day versus 63,200 in 2020.
Production was boosted by a 5% increase in Pearl's production in the KRI, which reached a record 33,800 barrels of oil equivalent per day, offsetting natural field declines in Egypt. Pearl Petroleum continues to make good progress on the development of its KM250 gas expansion project, which is still on track to deliver first gas in April 2023. Preparation for the drilling of four to five development wells scheduled to commence in March 2022 is underway, for which we have hired a rig. The KM250 expansion involves a total investment of $630 million and will add 250 million standard cubic feet per day of gas to current production.
Pearl Petroleum signed a $250 million financing agreement with the U.S. International Development Finance Corporation in the third quarter to help fund the gas expansion project, demonstrating the confidence international lenders have in the financial robustness of the project. Reflecting our commitment to the adherence to ESG principles, I am also pleased to report that Pearl Petroleum became carbon neutral in the KRI for the first time in 2021. This is an important milestone on our journey to reducing the carbon intensity of our operations. In Egypt, the Board took a decision on the 23rd of April, 2021 to terminate our agreement for the sale of the assets to maximize value for our shareholders. We successfully defended that decision in the subsequent arbitration, which fully vindicated Dana Gas's right to do so.
Going forwards, we are looking at all possible opportunities to extend the economic life of our assets. Last year, we successfully carried out major shutdowns on the El Wastani and Khor Mor gas plants, spending up to 85,000 work hours carrying out hundreds of work orders without a single HSSE incident. A notable achievement. If you can now turn to slide seven, I will provide you with the group's operating metrics in more detail. On the left-hand slide, you can see 12-month output dropped to 62,100 barrels of oil equivalent per day, a 2% decline from 63,200 in 2020.
The KRI operations increased production by 5% to a record 33,800 barrels of oil equivalent per day, and helped us offset the drop in production from Egypt, which fell 7% to 28,300 barrels of oil equivalent per day versus 30,300 in 2020, as a result of natural field depletion. The KRI's production milestone is the result of numerous process improvements at the Khor Mor gas plant, including a bypass project completed in 2020, as well as a debottlenecking program carried out earlier in 2018. Together, the improvements helped boost production by 50% from 305 million standard cubic feet per day of gas in 2018. Average realized prices are highlighted on the bottom row.
In 2021, condensate prices increased 93% to $54 per barrel versus $28 per barrel in 2020. This increase directly impacts 8,530 barrels of condensate that we produce, constituting 14% of our total production. Realized prices of LPG that comprises 10% of our total production were 25% higher at $35 per barrel of oil equivalent in 2021 versus $28 per barrel of oil equivalent in 2020. It's also worth noting that the price of Brent also jumped 69%, averaging $71 per barrel, as compared to $42 per barrel in 2020. The strong rebound in hydrocarbon prices had a positive impact on the quality of our collections, which will be later discussed in greater detail. Turning to slide 8, I'll give you an overview of our assets and operations in Egypt.
The financial performance has improved considerably since we made the decision to retain our assets. We have subsequently been actively engaging with EGAS to explore several exploration and development opportunities that will help the company unlock the remaining potential and extend the economic life of our onshore exploration assets. During the third quarter, the company conducted a five-well drilling and workover campaign, which added significant production and helped to partly offset the natural field declines. One of our actions to extend the lifespan of our assets was to carry out the successful shutdown of the El Wastani gas plant in December 2021 to perform internal inspections, equipment testing and certification, modifications, and upgrades. This was the first major shutdown since 2017, and was a massive undertaking.
With 790 workers on site spending a total of 85,000 hours to complete 142 work packs in 13 days, which was one day ahead of schedule. The work program followed strict COVID-19 precautions and was completed without incident. With regard to its offshore Block 6, the company is in advanced preparations for drilling the deep water Thuraya prospect and has completed the casing and well design, tendered for long lead items, identified manpower requirements, and mapped out the implementation strategy. It has already been awarded an extension to the second exploration phase by EGAS for nine months until March 2022, with an option for a further 21-month extension. Please turn to slide nine for a summary of the KRI operations. We are pleased with the performance of the company's KRI operations, which have delivered an increase in production.
We also achieved a significant milestone after reporting record sales gas and LPG production of 452 million cubic feet of gas and 1,112 metric t of LPG per day at the end of 2021. Our plans to further increase daily production to 700 million standard cubic feet per day are progressing well. The KM250 expansion project is on track to deliver first gas in Q2 2023. Operations, both in our existing plant and our new project activities, continue to observe and maintain the highest levels of health and safety. We have actively promoted the vaccination of our staff and contractors, and our vaccination rates among the workforce is now very high. We continue to prepare for the drilling of 4-5 development wells, which are scheduled to commence in March 2022.
Our ambitious program aims to increase daily production to over 900 million standard cubic feet per day of gas and 35,000 barrels per day of condensate with the completion of the proposed second 250 million standard cubic feet per day gas train. The $250 million financing agreement Pearl Petroleum signed last year with the U.S. International Development Finance Corporation will help fund the gas expansion works currently underway at the Khor Mor gas plant. The remaining financing requirements have already been secured through a regional bank facility and the EPC contractor. The seven-year DFC financing arrangement will support an increase in gas production capacity by 50% to 700 million standard cubic feet per day of gas to meet rising demand for clean natural gas for electricity generation and industry use in the KRI, substituting for diesel.
The uninterrupted supply of gas to power plants in Erbil, Chemchemal, and Bazian provides fuel for over 80% of the KRI's power generation. It has resulted in significant fuel cost savings through substitution of diesel, representing both environmental and economic benefits for the Kurdistan region and Iraq as a whole. The displacement of diesel fuel for power generation in the KRI with gas has also enabled emissions savings of 42 million t of CO2, thereby making a major contribution to reducing greenhouse gas emissions and reducing local air pollution in the region, as well as supporting the transition to cleaner energy sources to tackle global climate change. Now turning to slide 10 on arbitrations. Dana Gas received an update from Crescent Petroleum at the end of the third quarter regarding the issuance of the final award for damages in the first arbitration against NIOC.
The arbitration was initiated in 2009, pursuant to which a merit award on liability was made in 2014, finding NIOC in breach of its contractual obligations. This first arbitration award covers the first 8.5 years of the 25-year gas sales agreement from 2005 to mid-2014. Dana Gas's entitlement for the first period is $608 million. In addition, a second arbitration comprising a much larger claim for the 16.5 years covering the remainder of the gas supply period from 2014 to 2030 is currently underway. The final hearing is fixed for October this year in Paris, and the final award for damages is expected next year in 2023. I'll now hand you over to Chris to talk through the financial numbers.
Thank you, Patrick, and good afternoon, everyone. I'm delighted to report that last year was an excellent year for Dana Gas. This was primarily due to our ability to keep a tight lid on costs against the backdrop of elevated oil and gas prices. With record high profitability on record collections, we have also distributed a record level of dividends to shareholders. A total of $172 million dividend was paid out to shareholders or 9 fils per share, making Dana Gas among the highest yielding companies listed in the UAE. We are continuing to invest, grow, and expand our business, building on the momentum of our record production in the KRI and our investments in Egypt. Our operations in 2021 saw significant growth, supported by our management team's deeper engagement with partner government.
I will now run you through the full year 2021 financial results. Please can I ask you all to turn to slide 12. The company's net profit for 2021 was $317 million as compared to a net loss of $376 million in 2020. The key drivers were higher oil prices, improved operational performance, and other income. Full year 2021 profit included other income of $642 million, partially offset by net impairments of $451 million related to UAE gas assets and goodwill. As mentioned earlier by Patrick, Dana Gas in Q3 2021 recorded $608 million as other income, being the amount due following the arbitration award and against this booked an impairment of UAE assets of $360 million.
In addition, in Q3 2021, the company had also impaired the balance of goodwill related to the acquisition of Dana Gas Egypt assets back in 2007. Excluding the exceptional one-off items, the adjusted net profit or profit from operations increased by 256% on a like-for-like basis to $128 million. This is compared to an adjusted net profit of $36 million in 2021, reflecting underlying operating performance and higher oil prices. Full-year 2021 gross revenues increased 30% to $452 million compared to $349 million in 2020, supported by buoyant oil prices and higher production in the KRI. Now please turn to slide 13 which outlines the company's expenses during the period.
It's noteworthy that the company also posted its lowest G&A in 10 years. For the full year, G&A was $11 million, down from $12 million in 2020. OPEX, however, was slightly increased to $60 million from $55 million in 2020 due to a higher allocation of Dana Gas Egypt's overhead to OPEX as a result of reduced CapEx activity. Our OPEX and G&A per barrel oil equivalents remain within top industries quartile at $2.6 and $0.05 per BOE, respectively. The company's capital expenditure totaled $126 million in 2021 versus $56 million in 2020. Dana Gas Egypt and Pearl incurred $38 million and $88 million net to Dana Gas' share, respectively.
This CapEx increase is due to the resumption of the KM250 expansion and higher spending following the drilling workover campaign and the shutdown of the El Wastani plant in Egypt. Moving on to slide 14, which covers the company's liquidity and collections position. The company's liquidity and collections position remains robust. As of December 31, 2020, the company's cash position was $185 million, an increase of 70% compared to $109 million at the end of 2020. This is after paying a cash dividend of $172 million in 2021. The cash position includes $67 million being Dana Gas' share of cash held at Pearl Petroleum. In 2021, Dana Gas received $122 million in dividends from Pearl Petroleum.
The company also collected $377 million in 2021, more than double the 182 million dollars collected in 2020, following the full settlement of overdue receivables from the KRI for 2019 and 2020. Dana Gas saw its share of collections from sales of condensate, LPG and gas in the KRI jump 80% to 184 million dollars in 2021 as compared to 102 million dollars last year. In Egypt, Dana Gas collected 193 million dollars during 2021 compared to 80 million dollars received in 2020, representing a 141% increase. The payments from the government of Egypt have reduced the company's outstanding receivables to 24 million dollars, the lowest level since Dana Gas commenced operations there in 2007.
Trade receivables are considerably lower due to the high collection rate. As of 31 December 2021, KRI and Egypt receivables stand at $43 million and $24 million respectively. Egypt's receivables are at their lowest levels. As I've explained, 2021 was an excellent year for Dana Gas. On that happy note, I will hand you back to Patrick.
Thank you, Chris. If you can, please now turn to slide 16 where I will summarize the results. In 2021, Dana Gas delivered on its strategy to maximize shareholder value, producing an unprecedented strong set of financial results. We were supported by a strong rebound in oil prices, but it is also a result of our continued focus on maintaining a low-cost base and raising levels of efficiency across all of our operations while continuing to invest and grow our production. As a result, we achieved record output levels of gas and LPG production in the KRI. The high level of collections from our partner governments, which has also been aided by buoyant oil prices and management's proactive engagement, is particularly gratifying for the company.
Collections from the KRI and Egypt have doubled following the government of the KRI's full settlement of outstanding receivables from 2019 and 2020, and record levels of collections from Egypt. The strength of the current collections levels will support our business plans and expansion projects. Both in the KRI, where solid progress is being made on the development of Pearl Petroleum's KM250 project and in Egypt, where we are committed to maximizing the value of our assets for as long as possible for the benefit of our shareholders and the Egyptian state. The financial impact of keeping our Egyptian assets has been enormously positive due to the strong level of collections of $193 million in 2021. A 140% increase from 2020. Allowing a dividend payment to be made of $100 million.
Retaining our Egyptian assets has therefore played a key role in allowing the company to increase its dividend payments. Due to our exceptional performance, the Board made the decision to increase our dividend by 27%, reflecting the confidence the Board has in the company's financial strength and positive outlook. This puts Dana Gas among the highest yielding companies in the UAE and among oil and gas companies globally. This operational and financial performance was reflected in Dana Gas' share price, which reached its highest level last year since 2009. While some COVID-19 and inflationary risks to the global economy remain, we are very optimistic about the company's outlook for 2022, especially if oil prices remain at current or similar levels.
In the meantime, we will continue to look for ways to improve the efficiency of our operations and create shareholder value by developing our world-class fields in the KRI and exploiting the growth potential of our Egyptian assets. With that, I will hand you over to Mohammed to start the Q&A. Thank you again for your time. Over to you, Mohammed.
Thank you, Patrick and Chris. We will now start the Q&A session. In the interest of time, I will ask you to kindly observe a two question limit each. Operator, please start the Q&A session now.
Ladies and gentlemen, we will now start the Q&A session. If you wish to ask a question, please press zero one on your telephone keypad. Thank you for holding until we have the first question. The first question comes from Nikolas Stefanou from Renaissance Capital. Please go ahead.
Good afternoon, gents. It's Nikolas Stefanou from Renaissance Capital. Congratulations on the strong year, and thank you for taking my questions. Patrick, I guess the first one is for you. Last week a certain publication on the region announced that there have been some, you know, important developments in the gas sector of Kurdistan. More specifically, you know, a pipeline to be built between Khor Mor and Erbil and another one from Erbil to Duhok Power Plant. Now I presume that, you know, you being the upstream supplier of this gas, you must be, you know, quite involved in these discussions. Can you offer a bit more color on what's going on there? You know what I mean?
It looks like the ultimate intention is to kind of like connect with Turkey and export some gas and also, you know, who's financing this? That's my first question. The second one is on the comment on net zero. Well, not net zero, no. Carbon neutral for Kurdistan. Sorry for Pearl, I think, is the comment this year. Can you outline how you achieve that? I presume this would include some sort of like carbon sinks. You know, was that like tree planting? Did you buy credits? You know, you can offer a bit more color. It will be helpful. Thank you.
Yeah. Thanks, Nick. In answer to your first question, as you will recall, back in 2017 when Rosneft participated in the oil export pipeline from Kurdistan to Ceyhan in partnership with the KAR Group. They also announced that they were interested in putting a common user pipeline network in place in the Kurdistan region for gas purposes. We have obviously been awaiting the development of this common user pipeline since then. We're very pleased to hear that this has finally got the go ahead and is now going to be implemented. The common user pipeline as it is currently being proposed is going to be a 36-inch pipeline, which will double the existing pipeline from Khor Mor via Chemchemal to Erbil.
From Erbil to Duhok, it will be a 52-inch pipeline. Duhok, as you know, is a stranded, essentially a stranded power plant with 1 GW of generative capacity, but which is only functioning intermittently on one turbine fueled by diesel imports. Clearly, you know, the intent is to be able to route Khor Mor gas via the common user pipeline network to Duhok Power Plant. Of course, the distance from the Duhok Power Plant to the border with Turkey is 35 km.
It would be a relatively simple matter to extend the 52-inch pipeline to the border, where the Turks have already built a gas pipeline for the purposes of importing gas into Turkey. As you will recall, back in 2013, the KRI concluded a gas sales agreement with Turkey, which is the reason why the Turks extended their pipeline network to the border. Obviously this is an exciting development. We already have, as you know, our Khor Mor 250 expansion plan and project currently in progress with the expectation of first gas in April 2023. Clearly this gas with the implementation of the common user pipeline will be able to be routed to the Duhok power plant.
We also have and have been in discussions with the Kurdistan Regional Government for some time the concept of a back-to-back second expansion train of 250 million standard cubic feet per day of gas, which we would like to carry out following on from the first KM 250 train. We are currently in discussions for a gas sales agreement in that respect. We hope that we will have an agreement on that in due course to allow a final investment decision to take place in the near future. We understand that the Kurdistan Regional Government is capable of absorbing the full quantities that would then be produced from the Khor Mor plant of over 900 million standard cubic feet per day of gas.
That would result in power generation utilizing all of their power generation capacity, but that would result in power generation in excess of the Kurdistan Region's requirements. That would then need export of power from the Kurdistan Region to other markets, either in federal government, in federal Iraq or in Turkey. Alternatively, of course, the gas can be exported either again to southern Iraq or to Turkey. I think I hope that's addressed your question about the KRI gas sector, but I'll stop there and ask if you've got any follow-up questions on that, on that topic.
Well, certainly, it's probably a lot of questions on that. Yeah, the interpretation though I have, because I don't think that the tariffs for that pipeline, just from the kind of like gas flow between, you know, Khor Mor and to Duhok would actually make financial sense to either Rosneft or KAR Group. This movement as it has been kind of like being driven with more of kind of like constructive discussions on Turkish exports. To go that step, we must not be very far from that, from exports. Is that you know, interpretation? Is that how you interpret as well?
I'm not going to be tempted into speculating, but clearly once there is a 52-inch pipeline built to Duhok, which is 35 km from the border with Turkey, and that the 52-inch pipeline has a capacity to transport more than the power fuel requirements for the Duhok power station, then clearly the indications are that there is an intent to proceed to close that 35 km gap to allow gas exports to take place to Turkey.
Okay. The work that is being done on the pipeline I understand is EPC work. Should I take it that, you know, it's fully sanctioned and the actual building of it's undergoing as well. Like, I just want to understand the exact nature of the work that is being done right now.
My understanding is that this common user pipeline network will be built by the KAR Group. As far as I'm aware, that progress is already starting to take place.
Thank you. That's very clear. Now my second question on the kind of like carbon equality.
Yeah. Sure. Let me address that. Last year, in 2021, we carried out some plant modifications on the Khor Mor plant, which resulted in us reducing our CO2 footprint in the plant by 40,000 t of CO2 from 280,000 t to 240,000 t. A very substantial reduction in our CO2 footprint. We are already at the top quartile of producers with respect to our low carbon footprint. We have a carbon footprint of less than seven kilograms of CO2 per barrel of oil equivalent against an industry average of 21 kg. That is already industry leading.
We are not resting on our laurels, obviously, and we are attempting to further reduce and look at all opportunities that we have to further reduce our CO2 footprint in country. That has resulted last year also in the installation of metering devices to make sure that we can actually measure the volume, for example, of gas flared rather than going through an estimation process, and also carried out a fugitive methane emissions study to see how much fugitive methane is being released from the plant. Following up from that, obviously, we will be planning to put in place a number of projects that will seek to further reduce both our CO2 footprint and eliminate our methane, fugitive methane emissions.
However, last year, to cover the difference between the residual CO2 emissions that we had, we decided to go ahead and purchase carbon offsets. These carbon offsets were in the form of tradable carbon reduction units under the Clean Development Mechanism for wind plants in wind power generating plants in China and Mongolia. That was the offsets that we managed to purchase to cater for the remaining 240,000 t of CO2 emissions of last year.
Okay. It's not a very common decision from, you know, between your peers to purchase carbon credits from the market just, you know, just because you don't really have to. I mean, other companies have kind of, like, taken an approach of reforestation or other carbon sinks. I was just wondering, you know, is this kind of like the strategy you will approach, kind of like you take going forward, or was it more like one-offs for this year?
Well, we are continuing to look at mechanisms, first of all, to reduce, as I say, our CO2 emissions and fugitive methane emissions, and looking for ways in which we can cost-effectively offset the unreduced or irreducible component of those emissions. That is something that we are continuing to study.
Great. Thank you.
That will include a variety of carbon offset type of projects, including natural you know carbon sinks such as forestry initiatives.
Understood. Thank you.
Thank you. Ladies and gentlemen, just a reminder, in order to ask a question, please press zero one on your telephone keypad. Thank you. The next question comes from Anwar Khaled from Al Ramz Capital. Please go ahead.
Hi, good afternoon, and thank you for the presentation. This is Anwar Khaled from Al Ramz Capital. I have two questions related to the exceptional items. The first one, if you can give us any update on the expected payment date of the $608 million arbitration award. The second one, if you can give us more color on the $451 million impairment on the UAE assets. Thank you.
In terms of the payment date for the $608 million, obviously, the arbitration tribunal has made an award, and that award has required NIOC to make the payment of the damages award within a certain time frame. As anticipated, NIOC has lodged a procedural challenge to the, not to the quantum of the award, because that cannot be challenged, but to the process under which the award was made. In consideration that this arbitration has been afoot since 2009, and that the tribunal comprised senior legal figures from the U.K. and Australian Bar, it is of course vanishingly likely that any kind of procedural challenge on the basis of unfairness will be successful.
This is just a delaying tactic and a mechanism by which the Iranians need to demonstrate to their own domestic audience that they have tried everything possible to not have to pay. It comes down to a process of enforcement, and some jurisdictions allow you to enforce pending the in-parallel procedural challenge that's been put in place. Other jurisdictions require the procedural challenge to be disposed of before they will countenance enforcement. There are jurisdictions where we can start the enforcement process now, and we are informed by Crescent Petroleum that that process has begun.
You mean the cash collection process has begun?
No, the enforcement process has begun.
Clear.
You had a question about AED 451 million of offsets. I'll hand that to Chris.
Sure.
Please, Chris.
Well, quite simply, what we've done is booked, obviously, the NIOC award. You've seen the AED 608 you referred to. Obviously, the counter side to that is we have to impair some of the assets. The bulk of that, we haven't given the detail. You'll see it when we publish the full results. The bulk of it is to do with the NIOC award, the corresponding impairment, and also some impairment of goodwill in Egypt as well. You'll see the split when we put out the full numbers.
This is a combination of goodwill from UAE and Egypt?
The goodwill in Egypt and also the corresponding impairment associated with the NIOC award. Because we've taken the financial asset, you've got to impair the assets at the same time.
Clear. Thank you.
Thank you. Ladies and gentlemen, there are no further questions in the conference call. Thank you.
Thank you. Thank you everybody for joining us in the call, and sorry for the technical issue that happened. Please, for any follow up questions, refer to me anytime. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.