The global energy market spent 2025 wading through a supply glut with producers drowning in oil that nobody wanted—and 2026 is still struggling to clear the aisles.

According to the International Energy Agency (IEA), supply surged by 3 million barrels per day (bpd) as the US, Brazil, and Guyana hit record production, just as OPEC+ eased its cuts. Meanwhile, demand growth stalled at under 1 million bpd, dampened by the rise of EVs and increased energy efficiency.

Trade tensions between the US and China further tarnished investor sentimentt, in other words, there was way too much oil and not enough takers.

For Dana Gas, the Middle East's first and largest regional private sector natural gas company, this global drama translated into a direct hit to the wallet. Since their condensate and LPG prices are pegged to Brent crude, the dip to a $69 average hit their revenue.

Despite operational wins—like finishing the KM250 project ahead of schedule—the company was pit against a global trend that made 2025 a financial grind. It’s no surprise that the production numbers felt the weight of that global squeeze.

Oil’s well?

On the production front, the group churned out an average of 53,500 barrels of oil equivalent per day (boe/d) in FY 25, a dip from the 56,500 boe/d they pulled in FY 24. The story was different depending on where you looked: production in Kurdistan (KRI) was slightly up by 2% to 40,900 boe/d because the local power plants were hungry for gas and the Khor Mor field stepped up.

Egypt, on the other hand, had a tougher time, with output sliding 23% to 12,600 boe/d (down from 16,450 boe/d) since its fields are naturally aging. The good news is they’ve got a $100m investment plan in the works to reverse field declines and jumpstart growth in 2026.

Here comes the slide

As expected, Dana Gas had a bit of a bumpy ride in FY 25, with net profit dipping 14% to AED 476m compared to AED 553m in FY 24. Revenue took a 22% hit, landing at AED 1.28bn, down from AED 1.63bn, mostly because Brent crude prices cooled off to an average of $69 per barrel and production in Egypt slowed down.

Gross revenue fell about 13% LFL. By the end of the year, their cash pile sat at AED 788m—over double the AED 392m they had in FY 24.

Looking ahead to FY 26, the company is expecting production to top 75,000 boe/d by H2, thanks to a new pipeline in Kurdistan. However, it is important to note that by early 2026, the escalating Middle East conflicts began to threaten critical infrastructure, adding a layer of geopolitical volatility to an already squeezed production landscape.

Pipeline to profit?

Dana Gas is looking solid on the charts right now, sitting at AED 0.86, up 13.1% over the past year. For context, its 52-week high stands at AED 1, with a market cap of AED 6bn.

Even though its current P/E ratio of 11.8x is slightly pricier than its 3-year historical average of 10.3x, the dividend outlook looks promising. We're looking at a 6.9% yield for 2026 potentially rising to 11% by 2028.

All five analysts watching the stock have “Buy” ratings on it, with an average target price of AED 1.2. That leaves 24.4% upside potential on the table, making it a very tempting pick if you can stomach the regional volatility.

Growing pains

Talking of volatility, that potential profit comes with baggage. Dana Gas is under constant threat, with the Middle East tensions threatening to crash into the party and mess with its core operations.

Beyond the physical risks, the chaos in the Strait of Hormuz has turned shipping routes into a total nightmare. Even with big expansion plans in the works, the company’s balance sheet is hanging on whether the Middle East can finally catch a breather.