Dana Gas To Study Demerger Of Its Upstream Business

SHARJAH, (UrduPoint / Pakistan Point News / WAM - 31st Mar, 2020) Dana Gas, a regional private sector natural gas company, on Tuesday announced its intention to pursue a feasibility study studying a potential demerger of its upstream business into a new Company, which, as part of the demerger, will also be listed on the Abu Dhabi Stock Exchange, ADX.

Currently, the Sharjah-based company owns upstream oil and gas producing assets including Dana Gas Egypt and a 35 percent stake in Pearl Petroleum, its Kurdistan Region of Iraq exploration and production focused business. These assets will be collectively known as the 'upstream business', the company said on Tuesday.

Dana Gas's 'midstream business' will be the UAE Gas Project. This project is currently under arbitration and two separate damages claims are being made in relation to the periods 2005-2014 and 2014-2030.

If the demerger is executed, existing shareholders in Dana Gas PJSC will own shares in two separate entities. Both companies would continue to be publicly listed on the ADX.

According to a statement issued by Dana Gas, both upstream and midstream business have "distinct investment prospects". The Dana Gas board believe that there are a number of advantages to be realised by shareholders from structuring these as separate listed businesses, which is the reason the company is pursuing a feasibility study on the potential demerger, the statement added.

A resolution to allow the Board of Directors of the company to carry out a feasibility study into the demerger has been included on the AGM invitation published yesterday, 30th March 2020.

If the feasibility study authorisation is approved by the AGM, then once concluded and the required approvals have been obtained from the competent authorities, including the Securities and Commodities Authority, the demerger will be presented again to the General Assembly for approval.

Commenting on the announcement, Hamid Jafar, Chairman of Dana Gas, said, "We are studying the feasibility of a demerger as we believe it could be value accretive for our shareholders. Our upstream business has grown considerably over the last 13 years and will continue to deliver growth in the years to come. A pure-play upstream company may attract significant new investment both locally and internationally linked to future production growth. A pure-play midstream business would be more stable and have less exposure to commodity price changes."

"The demerger would provide the option to shareholders to remain invested in either or both companies at their discretion, each company having its own business strategy and opportunities," he concluded.