Dana Gas has sold part of its remaining stake in Mol Group and received arrears payments from the Egyptian and Kurdish governments.
Dana Gas, headquartered in Sharjah, said on Thursday it had raised US$83 million from the combination of share sale and arrears payments, with $18m coming from the sale of a quarter of its remaining stake in Mol, the Hungarian oil and gas group.
The company had acquired a 3 per cent stake in Mol in spring 2009 when Mol bought into Pearl Petroleum – then jointly owned by Dana Gas and Crescent Petroleum – which was developing the Khor Mor gasfield in Kurdish Iraq.
Dana Gas and Crescent Petroleum each received a 3 per cent stake in Mol in exchange for a total stake of 10 per cent in Pearl. Also in spring 2009, the companies sold a 10 per cent stake in Pearl to OMV, a Vienna-based oil company, for $350m in cash.
Dana Gas, which was founded in 2005, and in which Crescent Petroleum is a large stakeholder, has acquired several valuable assets in Kurdish Iraq and Egypt over the years but ran into trouble as the political and security situations in both places deteriorated, leading to the accumulation of hundreds of millions of dollars of arrears by both governments. This, in turn, led to difficulties financing Dana Gas’s development plans and to a financial restructuring last year.
Dana Gas sold half of its Mol stake In February last year for a little more than $130m when Mol’s shares were trading substantially above the 2009 price. However, Mol’s shares have since fallen by nearly half.
The company also said on Thursday that the Kurdish Regional Government paid $18m in advance against future deliveries of domestic fuel, including liquefied petroleum gas, from the Pearl project. Also, the Egyptian government paid it $47m of the $300m in arrears it owes, although $36m of that will be used by Dana Gas to pay its own arrears to local operators. The remaining $11m will be used to help fund a deal it announced last month, in which Egypt will pay Dana Gas some arrears as long as it reinvests that money to boost production.
Dana Gas is due to report third quarter earnings next month. Alex Stojanovski, an analyst at Deutsche Bank in Dubai, said he expected higher production volumes but lower realised prices to result in revenue up 5 per cent and clean profit down 1 per cent from the previous quarter. The shares closed at Dh0.62, up Dh0.02, but still well below the high at the start of the year of Dh1.02.
Dana Gas has an $850m outstanding sukuk, divided into conventional and convertible bonds, that was issued after the company’s debt restructuring in May last year. The bonds are both still trading below par, at 94 cents on the dollar, but “have been showing some better dynamics since early August”, said Apostolos Bantis, a bond trader at Commerzbank in Dubai.
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