Full disclosure: Dana Gas needs to address issues

Full disclosure: Dana Gas needs to address issues

2011 was obviously a great year for Dana Gas, with net profits reportedly growing by AED350 million compared to 2010; a whopping 220% increase. While you’d expect the market to react positively to such figures, the company’s failure to convince its stakeholders of its ability to settle its financial obligations, has left the door open for speculation and rumour.

February 13, 2012 3:52 by kippreport

Analysts were particularly sceptical of the fate of Dana Gas’ sukuk, scheduled to mature in October of this year, after the results press release was issued with no reference to the sukuk payments following promises the CEO made to provide a detailed update with the announcement. There was also no public follow-up to the results story – no media interviews, analyst call or subsequent news release.

A statement the company issued in mid-January had contained the following quote from CEO Mr Ahmed Al-Arbeed: “Dana Gas is successfully delivering on its strategy of growing its oil and gas operations in three major hydrocarbon basins. It is important to view the sukuk in the wider context of a highly successful company which has already achieved very substantial asset values, together with significant revenue and production growth in its relatively short history, and has great opportunities for further expansion of its portfolio in the medium and long-term.”

“We look forward to updating the market further when we announce our preliminary financial results on 31 January 2012 together with a detailed operational update,” he had added, possibly raising market expectations too high.

Analysts who spoke to Bloomberg about the story stressed their disappointment at Dana Gas’ slow pace of disclosure even though the company still had payment restructuring options to explore: “I’m not concerned about whether they have options, I’m concerned that they haven’t announced any plans and time is running out,” said one analyst.

“We look forward to updating the market further when we announce our preliminary financial results on 31 January 2012 together with a detailed operational update.” - Dana Gas CEO Ahmed Al Arbeed, except the update didn't come.

Dana Gas’ business seems to be doing well—sukuk and accounts receivable issues notwithstanding—but the company needs to be doing much more to convince stakeholders that it has a sound financial strategy, especially at a time when their CFO post has been vacant for over a year.

This article is originally published in the Bladonmore’s ADXtra.

The original post can be viewed here.