Dana Gas Q2 net profit falls on sukuk restructuring costs

United Arab Emirates-based energy company Dana Gas reported a 14 per cent decrease in second quarter net profit on Tuesday, citing one-off sukuk restructuring costs.

Dana Gas has been at the centre of a long and complex legal dispute with its creditors when last year it halted payments on $700m in sukuk, or Islamic bonds, saying the instruments had become unlawful in the UAE.

After reaching a consensual restructuring agreement in May, the firm said on Tuesday it completed the sukuk refinancing and that all legal proceedings have been brought to an end by the parties involved in the dispute.

Dana made a net profit of Dhs37m ($10m) in the second quarter, down from Dhs43m one year earlier.

In the six months to 30 June it registered a 4 per cent increase year on year to Dhs88m, thanks to higher realised hydrocarbon prices and savings on the sukuk profit payment, CEO Patrick Allman-Ward said in a conference call.

The net profit for the first half of the year would have been Dhs183m without the one-off sukuk restructuring costs, he said.

On the other hand, the newly agreed sukuk – reduced to $530m, with a three-year maturity and a new profit rate of 4 per cent per annum – will save the company $35m per year in profit payments compared to the previous debt instrument.

Dana, which in recent years has been struggling to recover hundreds of millions of dollars in overdue payments from Egypt, said trade receivables from that country were $202m as of June 30.