Sharjah-based private sector gas company Dana Gas has released its preliminary year-end financial results for 2011, tripling net profit after tax to $138 million from $43 million in 2010.
Earnings before interest, tax, depreciation, amortisation and exploration (EBITDAX) were $435 million (2010: $272 million), a year-on-year increase of 54%.
In a statement to the Abu Dhabi bourse, the company said group-wide production averaged 66,200 boepd for the year against 55,500 boepd in 2010, generating gross revenues of $690 million. The company says increased production is mainly attributable to the addition of LNG trains in the Kurdish region of Iraq.
The company has booked a $88.75 million hit to the value of its investment in Hungary’s MOL, which is not included in the above figures. The unrealised loss follows a 16% decline in MOL’s share value exacerbated by an exchange rate loss as the Hungarian Forint against the dollar.
Surprisingly, the firm makes no comment in its statement about a $920 million convertible sukuk – a Sharia-compliant bond – which pays 7.5% and is due for refinancing in October. Fears that Dana will not have the money to repay the bond, and that it will find refinancing difficult given the underlying current weakness of the UAE’s capital markets, hav weighed on the group’s share price through the year. The company has shed 42.19% of its share value over the last twelve months despite healthy revenues and consistent profitability.
On 24 January Bank of America downgraded its outlook on the company from ‘neutral’ to ‘underperform’ on speculation that Dana Gas will restructure the bond, and the bond has been widely reported a millstone around the company’s neck.
Yields on the sukuk have spiked over the last few months to over ten times the regional average on fears the company will struggle to refinance, something the firm’s record of near silence on the issue has not helped. The price of the sukuk at the time of writing is just $0.69 on the dollar.
Problems with receivables from key markets – Egypt in particular – have also held down the company’s share price.
As previously reported, Dana plans to list or part list in London, disclosed in August that it had appointed Bank of America Merrill Lynch, Citi, Deutsche Bank and JP Morgan in preparation. The status of the plan to list is unclear.
“We are proud of the Company’s strong operational performance in 2011,” said Ahmed Al-Arbeed, Chief Executive Officer, “particularly given the challenging environment. We have successfully continued to grow our reserves and production, and are now very focussed on receivables collections while preserving our assets for benefit of all stakeholders.”
Shares in the company opened up 2.7%, by 1 fil to 38 fils ($0.10) this morning.
