Dana Gas seeks around $500mn to fund output expansion

DUBAI: United Arab Emirates energy firm Dana Gas is exploring financing avenues, including green bonds, to raise around $500 million for a plan to more than double its output capacity, its chief executive said.

Dana plans to raise its capacity in the Kurdistan Region of Iraq (KRI) to 900 million standard cubic feet per day (mmscfd) with two processing trains of 250 mmscfd each.

"The total scope that we're looking at is probably another $500 million. But that would ... be split up between hopefully contractor financing, some bank debt and maybe this green bond," CEO Patrick Allman-Ward told Reuters in an interview.

Dana rocked the global Islamic finance industry in 2017, when it said some $700 million outstanding sukuk, or Islamic bonds, were no longer valid under UAE law because of changes in Islamic financial practice.

After a protracted legal battle, it reached an agreement with creditors in 2018 and repaid the sukuk in full last year.

As of end-2020, Dana Gas had total debt of $163 million including $73 million for the KRI expansion project, an investor presentation showed.

The first train is expected to be completed in the first half of 2023, although Dana is exploring ways to speed up that schedule. The second train is expected to be completed towards the end of 2024.

The CEO said he was certain Dana Gas would turn a profit this year, after posting a 2020 net loss of $376 million on impairments linked to the sale of its onshore Egyptian assets.

Following last year's fall in oil prices, the impairments were $244 million on the value of the assets, which Allman-Ward said were nearing the end of their field life, and $163 million on goodwill when it bought them in 2007.

Dana retains an offshore block in Egypt, which Allman-Ward said is expected to start production between 2026 and 2028 and would target 500 million to 1.5 billion scfd, depending on the discovery size. He said the block potentially holds 30 trillion cubic feet of gas.