(MENAFN- Gulf Times) Dana Gas PJSC said it expects a 'significant liability for holders of its Islamic bonds in a legal battle over the securities.
Sukuk holders will likely repay the energy producer the 'excess on account of profit payments, chief executive officer Patrick Allman-Ward said on a conference call with reporters, after the company announced that second-quarter profit rose to $12mn from $7mn a year earlier.
The Sharjah, the United Arab Emirates-based company missed a profit payment last month on $700mn of debt as it seeks to prove in court that its Islamic bonds are no longer Shariah compliant.
Dana Gas initially proposed to replace the bonds, which mature in October, with four-year securities paying less than half their current profit rate, but it retracted that offer last month in favour of a court settlement.
Dana Gas has reclassified the sukuk from being a borrowing to 'capital received on issuance of sukuk to reflect the company's legal position, Allman-Ward said.
Investors have questioned the validity of Dana Gas's legal bid, since neither sukuk regulations nor UAE laws governing the matter have changed since they were issued in 2013.
The company is restructuring debt for the second time in five years as overdue payments from Egypt and Iraq's Kurdish region leave it grappling for funds. Dana Gas, which pumps most of its gas at fields in Egypt and Iraq, is seeking to recover payments from both countries for overdue bills.
It was owed $900mn at the end of June, down from $982mn as of the end of 2016.
Dana Gas said profit was driven by increased revenue from the Kurdish region of northern Iraq and lower expenses, partly offset by a decline in investment and finance income. Revenue grew 8.3% to $104mn.
Realised prices rose 23% and production in Egypt increased 3%. Hydrocarbon output fell 2% to 65,400 barrels of oil equivalent per day on reduced production at its Zora field in the UAE and the Kurdish region. Realised prices averaged $42 a barrel for condensate, compared with $34 a barrel a year earlier, and $29 a barrel per oil equivalent for liquefied petroleum gas, up from $27 a year earlier.
Allman-Ward said he expects production to be 'more or less flat in the second half of the year and oil prices to average between $45 and $55 a barrel. Brent crude rose 0.1% higher as of 1:38pm in Dubai to $50.80 a barrel.
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