Dana Gas is weighing whether to list some of its assets on the London Stock Exchange as trading volumes and stock valuations on local markets stumble.
The potential London listing follows attempts by at least two other companies in the Gulf to enter European markets with the aim of attracting more trading in their shares and getting fairer valuations for their assets.
DP World, the Dubai global ports operator, launched a second primary listing in London last month to complement trading on Nasdaq Dubai. Oman's Renaissance Services, an oil and gas services company, tried but failed to list one of its subsidiaries in London earlier this year but is considering a second attempt.
"I think they're trying to follow the same route as a couple of companies in the region where they think the markets are mis-pricing their reserves," said Abid Riaz, an analyst at EFG-Hermes in Dubai. "They announced a large find in Egypt [last year] and the stock didn't move at all."
Dana Gas is based in Sharjah and has oil and gas exploration and production in the UAE, Iraq and Egypt. Its shares are listed on the Abu Dhabi Securities Exchange (ADX), and it is one of only a few energy companies open to non-government investors in the region.
The company said in a disclosure to the exchange yesterday that its board of directors discussed "plans to list some of its assets" in London at a recent meeting, as well as preparations to refinance a US$1 billion (Dh3.67bn) Islamic bond that comes due next year. Representatives of the company could not be reached for further comment.
Analysts say a prime target for a London listing would be Dana's Egyptian subsidiary, a company once listed in Canada that it acquired for Dh3.7bn in 2006. Since the acquisition, Dana has tripled its Egyptian reserves through successful exploration efforts, adding four new discoveries last year alone.
Investors may also be interested in Dana's operations in Iraqi Kurdistan, a market many European companies and investors are keen to enter.
But analysts believe the main driver behind Dana possibly listing assets in London is its frustration at not getting the price it deserves on local markets. Even for well-run, operationally sound companies such as Dana, Mr Riaz said, "the reality is that all of them trade at significant discounts to their peers that trade on Western exchanges, and I guess that's why we're seeing this trend of these companies fed up with the fact that they're being undervalued".
Since the beginning of this year, the ADX General Index has fallen by 0.2 per cent, while Dana Gas shares have lost 15 per cent.
Dana Gas has enjoyed a period of rising profits because of higher energy prices and new production at its wells.