Dana Gas shares have surged as the only listed oil and gas production company in the Gulf plans to buy back 10 per cent of its share capital. The board of the Sharjah-based company also approved an additional budget for continuing projects in the UAE and Egypt, it said in a statement on the Abu Dhabi Securities Exchange (ADX) website yesterday. Dana Gas shares closed 2.9 per cent up at 71 fils, bringing total gains this week to 7.5 per cent. It accounted for almost half of the day's trade volumes on the ADX, which closed flat.
"It is positive for the market and for Dana Gas. In a falling market Dana sees valuations at the right level where it can initiate buyback," said Faisal Hassan, the head of research at Global Investment House in Kuwait. "These shares can be utilised as source of funding at a later stage when the market valuations are right." Buying back shares is a way of boosting their market value at a time when investors are shying away from equity markets.
There are four stocks on UAE exchanges that are trading below 60 per cent of their nominal value, and under the regulations can be suspended from trading. The regulator, the Emirates Securities and Commodities Authority, has said it did not intend to suspend the shares because of market conditions. Maryam al Suwaidi, the deputy chief executive of the regulator, said the companies "still are doing well by all standards" and the share prices did not reflect their underlying financial condition.
Dubai and Abu Dhabi stocks have fallen the most among regional bourses so far this year. This week, the research firm MSCI Barra decided not to upgrade the exchanges to emerging market status. Mr Hassan said he was bullish on Dana stock, which had retreated almost 40 per cent from its 12-month peak of Dh1.18. The company posted a profit of Dh33 million (US$8.9m) in the first quarter compared with a loss of Dh32m a year earlier.
It is developing gas deposits, production and transport facilities in Iraq and Egypt, and is working on an offshore project in the UAE. Analysts at Global expect the overall hydrocarbon production from Dana to grow 26.9 per cent this year. @Email:skhan@thenational.ae
