Sharjah-based firm Dana Gas has announced plans to demerge its businesses to create two separate entities that will continue to be listed on the Abu Dhabi Securities Exchange (ADX).

As part of the plan, the company’s assets in Egypt and Iraq will be placed under one company that will be collectively known as “upstream business.” 

The other entity, called the “midstream business,” will comprise the UAE Gas Project, which is currently under arbitration.

“Both companies would continue to be publicly listed on the ADX,” the company said on Tuesday.

If the demerger is executed, the company’s investors will own shares in two separate entities, the company said in a statement to ADX.

According to Dana Gas, the proposed demerger would be beneficial to its shareholders, citing that its upstream and midstream operations have “quite distinct investment prospects.”

“We are studying the feasibility of a demerger as we believe it could be value accretive for our shareholders. Our upstream business has grown considerably over the last 13 years and will continue to deliver growth in the years to come,” said Hamid Jafar, chairman of Dana Gas.

He said establishing a separate upstream company may attract significant new investment, both locally and internationally.

“A pure-play midstream business would be more stable and have less exposure to commodity price changes. The demerger would provide the option to shareholders to remain invested in either or both companies at their discretion, each company having its own business strategy and opportunities,” Jafar added.

The company’s board of directors has already approved a resolution authorising the conduct of a feasibility study into the potential demerger.

(Writing by Cleofe Maceda; editing by Seban Scaria)


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