DONG Books $1 billion in Impairment Charges, Sees Bleak Prospects for 2015

Two Nordic players registered setbacks in the last hours, with Denmark’s DONG booking a $1 billion in impairment charges and Norway-based Reef Subsea heading toward serious troubles. 

On Wednesday, GC Rieber Shipping ASA wrote that two companies owned by private equity fund HitecVision V, LP, had defaulted on debt obligations. 

‘As these two entities own the company and group Reef Subsea AS, it is GC Rieber Shipping's opinion that there may be significant risk related to GC Rieber Shipping's outstanding receivables for the charter of vessels to subsidiaries of Reef Subsea. The outstanding receivables amount to NOK 45 million. GC Rieber Shipping will seek to recover amounts due through established collateral in Reef Subsea AS’ reads a note published on GC Rieber Shipping’s website.

Reef Subsea AS owns Reef Subsea, which provides project management services on onshore and offshore projects.

A few hours later, DONG Energy announced its financial results for 2014, and spoke about the current year.

‘Net profit was a loss of DKK 5.3 billion compared with a loss of DKK 1.0 billion in 2013. The net profit in 2014 was affected by post-tax impairments of DKK 6.6 billion in the E&P business mainly as a result of the lower oil and gas prices’ reads the press release.

The company reported a 2014 EBITDA results in line with its outlook, on good results of its offshore wind department and ‘a record high production of oil and gas.’ 

On the other hand, it announced a difficult year ahead.

‘EBITDA in 2015 will be negatively affected by the significant decline in oil and gas prices’ the company wrote.