Dana Gas shares soar thanks to $1bn settlement
Shares in Dana Gas increased to their highest level in 2017 during Monday’s early trading, following an agreement reached by the energy firm over a dispute with the Kurdistan regional government (KRG).
Dana Gas stock surged by 14 per cent in the morning trading in Abu Dhabi, as the UAE’s bourses resumed trading after the Eid Al Adha holiday.
End of dispute
A statement issued last Wednesday on the energy firm’s webpage read: “The parties have mutually agreed to fully and finally settle all their differences amicably by terminating the arbitration and related court proceedings, and releasing all remaining claims between them, including the substantial damages asserted by the Consortium against the KRG; implementing a mechanism for settlement of nearly $2.24 million awarded by the Tribunal to date; and proceeding with immediate further development of the Heads of Agreement (HoA) world class resources for mutual benefit as well as the benefit of the people of the Kurdistan Region and all of Iraq.”
This brings to an end a long-running arbitration process brought by the Pearl Consortium against KRG that began in October 2013, accusing it of blocking further development on the region’s Khor Mar and Chemchemal fields. The Pearl Consortium includes Dana Gas, its parent Crescent Petroleum, OMV of Austria, Germany RWE and Hungary’s MOL.
Who gets what
Under the terms of the settlement agreement, the KRG will immediately pay Pearl a sum of $600m. The KRG will also immediately pay Pearl a further $400m to be dedicated for investment exclusively for the aforesaid further development to substantially increase production.
Moreover, Pearl will increase gas production at Khor Mor by 500 MMscf/day, a 160 per cent increase on the current level of production. The additional gas, together with significant additional amounts of condensate, is expected to begin production in approximately two years.
Markets taking stock
On Monday, nearly 100m Dana stocks changed hands in the first two hours of trading, accounting for more than two-thirds of total trade on the Abu Dhabi exchange, said The National.
On the other hand, Reuters quoted Allen Sandeep, head of research at Cairo-based Naeem Brokerage, saying that the dispute settlement is a major positive development for Dana Gas.