Dong Quits Oil, Gas for Renewables

Dong Energy, the listed Danish energy producer, on November 8 announced its decision to exit from oil and gas business and to focus on renewable energy instead.

According to a company statement, Dong Energy CEO Henrik Poulsen said that the process to exit the business had begun already. "This should be seen in the context of Dong Energy’s strategic transformation towards becoming a global leader in renewables and a wish to ensure the best possible long-term development opportunities for our oil and gas business. There can be no assurance as to the outcome or the timing of the completion of the process," he said in the statement.

Dong Energy had planned to use its oil and gas business to fund investments in renewable energy but in late October it said that it is reviewing strategic options regarding the future of the business, and that it had engaged JP Morgan to conduct a preliminary market assessment.

The company reported net profit DKr3.08bn ($457.6m), compared with DKr2.8bn a year earlier, while its revenue dropped 32% on the year to DKr14.3bn. "The increase was driven by higher EBITDA, lower depreciation and a DKr1.3bn gain from the divestment of the gas distribution grid to Energinet.dk," the company said.

Shell's Ormen Lange platform (Dong: 10.34%)

(Credit: Shell)

Cost performance at its oil and gas business continues to improve, driven by continued renegotiation of supplier contracts, reduced exploration spending and improved operational efficiency, with total cash spend decreasing by 36% compared with the same period last year, he said. "We now expect O&G to be cash flow positive in 2016, a year earlier than previously communicated."

Murat Basboga