ADNOC Gas exceeds market expectations as profit jumps 21% to $1.1 billion in Q1 2024

ADNOC Gas delivered robust Q1 2024 results, with revenues increasing by 15% year-on-year (Y-o-Y) to more than US $6 billion underpinned by a strong increase in demand in the UAE, which saw overall sales volumes increase by 14% Y-o-Y.

As a result of the improved revenue and continued focus on operational efficiency, Q1 2024 earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased to $2,076 million, a 17% Y-o-Y increase. EBITDA margin improved to 35% from 34% a year earlier, underscoring the benefits of our 25-year gas supply and purchase agreement, ADNOC Gas said in a statement on Tuesday.

Highly efficient domestic gas supplier

The company’s adjusted net income improved by 21% Y-o-Y to $1.1 billion while its domestic gas net income unit margin improved by 20% Y-o-Y. ADNOC Gas said this was a testament to its position as a highly efficient domestic gas supplier, benefiting from favourable market demand. The company fulfils more than 60% of the UAE’s gas demand and is the largest supplier to the petrochemical sector in the country, it said.

Dr. Ahmed Alebri, Chief Executive Officer of ADNOC Gas, said: “Fuelled by robust sales volumes and ongoing margin improvement in our core domestic operations, we’re proud to have achieved a 21% Y-o-Y increase in adjusted net income. While delivering improvement across all key metrics, we have made significant progress on our strategic growth projects, including signing additional LNG sales agreements that reinforce our position as a trusted and reliable global supplier.”

According to Dr Alebri, the company’s strong profitability was backed by a high cash conversion rate where its free cash flow generation was up 47% year-on-year to $1.1 billion.

“Our robust cash flow generation will enable us to grow the annual dividend by 5% to $3.41 billion in 2024, in line with our dividend policy. Thanks to ADNOC Gas’ strong financial performance and an exceptional portfolio of growth projects, our shareholders stand to continue to benefit from an annual dividend yield of over 5% in addition to the potential for share price appreciation,” he added.

Global growth opportunities

The company plans to invest more than $13 billion in domestic and international growth opportunities between 2024 and 2028, with its predictable margin business expected to grow its EBITDA by up to 40%. ADNOC Gas is well-positioned to benefit from ADNOC’s planned expansion of oil production capacity to five million barrels per day by 2027, which will contribute to an increase in associated gas production.

ADNOC Gas is seeking to grow internationally and acquire new positions in the gas value chain in Europe, India, China and South-East Asia with the aim of enhancing the UAE’s presence in international LNG markets and generating an additional return that enhances its current business.

In line with its commitment to operational excellence, ADNOC Gas achieved an impressive average reliability rate of 99.4% across its facilities in Q1 2024 compared to an average of 99.1% in 2023.

Ruwais LNG project achieves key milestones

In Q1 2024, ADNOC made significant progress with Ruwais LNG, a strategic project for ADNOC and the UAE on which ADNOC Gas is currently providing support and advice. ADNOC awarded a pivotal early Engineering, Procurement, and Construction (EPC) contract for Ruwais LNG during Q1, marking a crucial step forward for the project, ADNOC Gas said.

Additionally, ADNOC secured two long-term Heads of Agreements for LNG offtake from the facility, accelerating the project’s momentum. ADNOC recently announced its intention to take a final investment decision (FID) on the Ruwais LNG project. The company intends to acquire the Ruwais LNG plant and more than double its LNG production capacity by 2028, it said.

In Q1 2024, ADNOC Gas incurred $387 million in CAPEX, up 123% Y-o-Y and in line with its guidance for FY24. It also continued its strong sales momentum from 2023, signing a new 10-year LNG supply agreement in Q1 that will see ADNOC Gas supply 0.5 million metric tonnes of LNG per annum to GAIL India Limited.

Annual 2023 dividend paid following AGM approval

At the recent Annual General Meeting (AGM), the Board of Directors approved ADNOC Gas’ proposal to distribute a full-year 2023 dividend of $3.25 billion. This included an inaugural interim cash dividend of $1.625 billion paid in December 2023, with the remaining $1.625 billion paid on 26 April 2024.