Dana Gas shares soar with Egyptian arrears reduced further.
Dana Gas shares soared yesterday after the company said it received another payment from the Egyptian government, reducing the arrears owed by nearly 30 per cent so far this year.
The Sharjah-based oil and gas operator, which is 19 per cent owned by Crescent Petroleum, has struggled because of accumulated government arrears in its two main operating areas, the Nile Delta in Egypt and the Kurdish region of Iraq, which has also raised worries about its ability to refinance a US$700 million sukuk due in October.
The company’s shares had fallen by one-third this year to a low of 39 fils at the end of May, as Egypt again faltered on promised payments and arrears began to rise again.
But in the past week they have recovered sharply as those payments are back on track; Dana Gas shares were up another 11 per cent yesterday at 51 fils.
Yesterday the Dana Gas’ chief executive, Patrick Allman-Ward, reported to the Abu Dhabi Securities Exchange that Egypt had made another $40m payment, which brought total payments this year to $135m and reduced arrears by $78m to $187m. In the first quarter of the year, Egypt had paid Dana Gas only $13m and pushed arrears up 9 per cent to $285m.
Dana Gas earlier this week said it had hired restructuring specialists Houlihan Lokey and other advisers to help it negotiate with bondholders.
The company had to go through a similar exercise four years ago because of the erratic nature of payments from Egypt and the Kurdish region, where governments have been dealing with crisis situations.
Dana Gas received $31m in the first quarter from the Kurdish Regional Government, representing more than 100 per cent of the amount billed. But arrears there still stood at $713m; the company has won an international court ruling for actual damages of nearly $2 billion in a long-running dispute with the government there.
(Source: The National)