Dubai: Investors in Dana Gas PJSC's Islamic bonds are weighing how much credence to give company assurances that its Iraqi output is secure from the sectarian violence ripping through the nation.
The gas producer's October 2017 callable sukuk fell for seventh day at 12:31pm in Abu Dhabi. It on Monday erased gains after Dana Gas said in a statement on its website that operations in the Kurdish region of Iraq haven't been interrupted and all facilities and people are safe. The yield on the notes last week jumped 43 basis points, the most since November, compared with a four basis-point average increase for Middle East sukuk, according to JPMorgan Chase indexes.
The company is a partner in two Iraqi gas fields, which accounted for 53 per cent of its first-quarter revenue and are less than 100 miles from Kirkuk, where Kurdish forces are facing the breakaway al-Qaeda group Islamic State in Iraq and the Levant.
"There's been a very negative sentiment in general for companies who have assets in Iraq," Apostolos Bantis, a Dubai- based credit analyst at Commerzbank, said by phone on Monday. "Disruption has not been reported in the Kurdistan area, but investors are getting concerned and we may see further volatility."
The yield on the callable sukuk added 23 basis points to 9.06 per cent on Monday, according to data compiled by Bloomberg. Dana Gas's convertible notes with a matching maturity jumped 269 basis points as the shares fell to 72 fils, the lowest close since December. The stock gained four per cent yesterday in Abu Dhabi.
"There's obviously heightened concern given there is uncertainty in the neighbourhood," Robinder Singh, Sharjah-based investor relations director at Dana Gas, said by phone on Monday. "Kurdistan itself appears to be unaffected by the situation. We're monitoring closely and ensuring our people are safe and sound."
Kurdish troops, known as peshmerga, pushed outside their semi-autonomous enclave in northern Iraq to protect the nation's fourth-biggest oilfield, Jabbar Yawar, Peshmerga Ministry secretary-general, said in an interview in Erbil on Monday. They now control all energy facilities and oil deposits in the Kirkuk area other than a refinery in Baiji, Yawar said.
Majid Jafar, a Dana Gas board member and chief executive officer of its main partner in Iraq, Crescent Petroleum, on Monday told Bloomberg Television natural gas production in the country's semi-autonomous region is running normally.