Dana Gas plans feasibility study for demerger of upstream business
Dana Gas owns upstream oil and gas producing assets including Dana Gas Egypt and a 35 per cent stake in Pearl Petroleum. - File photo
Dubai - If the demerger is executed, the existing shareholders in Dana Gas will own shares in two separate entities.
Dana Gas, the Middle East's largest regional private sector natural gas company, today announced its intention to pursue a feasibility study for exploring 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 company owns upstream oil and gas producing assets including Dana Gas Egypt and a 35 per cent stake in Pearl Petroleum, its Kurdistan region of Iraq E&P focussed business. These assets will be collectively known as the "Upstream Business".
The company'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, the existing shareholders in Dana Gas will own shares in two separate entities. Both companies would continue to be publicly listed on the ADX.
The upstream business and the midstream business have quite distinct investment prospects, and the Dana Gas Board believes 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.
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."