Shares of Dana Gas soars after Iraqi Kurdistan agreement
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    Shares of Dana Gas soars after Iraqi Kurdistan agreement

    Shares of Dana Gas soars after Iraqi Kurdistan agreement



    DUBAI,—
    Shares in Abu Dhabi-listed Dana Gas soared early on Monday after it agreed on overdue payments from Iraqi Kurdistan’s government, while United Arab Emirates stock markets were generally quiet and other regional bourses remained closed for Eid holidays.

    Dana jumped 14.1 percent.

    Kurdistan, an autonomous, independence-seeking region of northern Iraq, agreed to immediately pay Dana’s gas production consortium $1 billion, including $400 million that will be used for investment in the region; Dana will receive 35 percent of the money.

    In addition, $1.24 billion will be reclassified from debt owed by the government to outstanding costs to be recovered by the consortium from future revenues as it operates in Kurdistan.

    Other Abu Dhabi stocks were much more subdued, with the index rising only 0.3 percent.

    In Dubai, the index slipped 0.3 percent as DAMAC Properties DU> dropped back 2.2 percent and Emaar Properties lost 0.6 percent.

    The most heavily traded stock, builder Drake & Scull, added 1.8 percent.

    Allen Sandeep, head of research at Cairo-based Naeem Brokerage, said: “Overall, we view this as a major positive development for Dana Gas.”

    In addition to Dana’s share of the $600 million payment, “future benefits to Dana Gas should be much larger, given the massive resource potential of the two fields, Khor Mor and Chemchemal.

    Dana Gas’s share of 2P reserves in the two fields amounts to close to 1 billion barrels of oil equivalent, with huge upside.”

    Dana has not said the Kurdistan settlement will have any impact on its dispute with creditors over its $700 million of outstanding sukuk.

    However, Sandeep said Dana’s credit rating should now “witness a big leap”, making refinancing its debt a much less expensive option compared to profit rates of around 9 percent paid under the existing sukuk.

    Any special dividend payment by Dana using the Kurdistan money appears unlikely, as a July injunction in the sukuk case at London’s High Court forbids it from making dividend payments without settling the sukuk.

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    Last edited by pusinsbiz; 09-04-2017 at 06:50 PM.



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