Dana Gas shareholders approve cash dividend and proposal for demerger study

The company is considering splitting its upstream and midstream business into separate entities

A Dana Gas facility in Iraqi Kurdistan, which is part of the company's business that is being considered for a demerger. The comapny's shareholders approved a dividend payment of Dh5.5 fils per share Show more

Shareholders of Sharjah-based Dana Gas approved a dividend payment of 5.5 fils per share for the year ended December 31, 2019, and gave the green light to progress a study into splitting the company into two separate entities.

A feasibility study will now be undertaken to investigate proposals announced late last month to demerge its upstream and midstream businesses, to create two publicly-traded companies on the Abu Dhabi Securities Exchange.

Under the plan, existing shareholders would own shares in both the upstream business, which comprises operations in the Kurdistan Region of Iraq (KRI) and Egypt, and the midstream business that owns a UAE Gas project that is currently under arbitration, the company said on Wednesday.

“During 2019, we were able to add to production and strengthen our operations, making us more resilient to the difficult global economic environment," Hamid Jafar, chairman of Dana Gas, said.

"The fact that the majority of our natural gas contracts are at fixed prices helps us remain competitive and will allow us to capitalise on any opportunities."

Dana Gas reported an annual net profit of Dh575 million for 2019 compared with a net loss of Dh682m in the previous year, on higher production from the Kurdistan Region of Iraq, where the company has gas assets. Dana Gas's profitability also received a boost as provisions for impairments declined and earnings from Kurdistan and Egypt offset the fluctuation in oil prices.

In 2019, the company's oil production rose 5 per cent year-on-year to average 66,200 barrels of oil equivalent per day (boepd) with production from KRI jumping 18 per cent. Production in Egypt fell 4 per cent to 33,000 boepd and its UAE output averaged 1,000 boepd.

The 5.5 fils per share payment equates to a total payout of Dh384m and is the third year in succession that the company has paid a dividend, Mr Jafar said.

Set up in 2005, Dana Gas has exploration and production assets in Egypt, Kurdistan Region of Iraq and the UAE, with 2P (proven plus probable) reserves exceeding one billion barrels of oil equivalent.

In a separate filing on the Abu Dhabi exchange, the company said it had bought back $17.8m (Dh65.4m) of its 4 per cent Nile Delta Sukuk certificates, which will be cancelled. Following the purchase, there are $379.6m worth of these certificates outstanding.