* Q1 profit plunges 98 pct to $5 mln
* Q1 petroleum sales before royalties fall 50 pct
* Sets dividend of 10 Canadian cents a share
* Shares fall 4 pct (Recasts; adds analyst comments, details, share movement)
By Isheeta Sanghi
BANGALORE, May 13 (Reuters) - Africa- and Middle East-focused oil and gas firm Addax Petroleum Corp AXC.TO on Wednesday posted a 98 percent drop in first-quarter profit, weighed down by a steep drop in crude oil prices.
Net income fell to $5 million, or 3 cents a share, from $240 million, or $1.51 a share, a year earlier.
Petroleum sales before royalties slumped 50 percent to $576 million. Average crude oil sales price fell 54 percent to $43.98 per barrel for the quarter, the company said.
Production fell 3 percent to 134,730 barrels per day. The company said it also began production in Kurdistan region in Iraq in the first quarter at an average rate of 2,850 barrels per day.
“Production came as per what I was expecting, they had 3,000 barrels in Kurdistan that I didn’t model, but other than that it was in line,” Raymond James analyst Rafi Khouri told Reuters.
Earlier this week, Addax said the Kurdistan Regional Government, which decided to start the export of crude oil, requested the company and Genel Energy International Ltd to prepare to truck oil from the Taq Taq field to the Khurmala export station on or soon after June 1.
Khouri said if the Kurdistan deal is confirmed, it will definitely be a positive for the company.
The start of deepwater drilling offshore Nigeria could be “game changing” for the company, the analyst said, adding that if it finds material oil fields, that could have a big impact on reserves.
Addax said it still sees annual average working interest gross oil production for the year to be between 132,000 and 137,000 barrels per day.
The company’s shares, which have surged 55 percent over the past three months, were down 4 percent at C$34.66 Wednesday morning on the Toronto Stock Exchange. (Additional reporting by Richa Dubey; Editing by Deepak Kannan) ((firstname.lastname@example.org; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging:email@example.com))