Dong's Upstream 'Sold by End-2017'

Denmark’s state-run Dong Energy said January 19 it has initiated a process with the ultimate aim of divesting all its upstream oil and gas activities.

The announcement comes despite reports last month that talks on a possible $10bn sale of Dong’s upstream to Maersk had stalled. Dong's statement gave no indication of possible buyers.

“The activities are expected to be sold before the end of 2017, and the Oil & Gas segment is therefore presented as discontinuing operations in the financial statements for full-year 2016. This means that the profit for the year and cash flows of the Oil & Gas segment are presented separately from the Group's continuing operations, and that the balance sheet items are presented as assets classified as held for sale,” Dong said 4pm local time.

It said the content of its announcement does not change Dong Energy's previously announced outlook for full-year 2016, including that for the Oil & Gas segment. As a result of the above, the expected pre-tax (Ebitda) earnings of Dkr 24bn-25bn ($3.45bn-$3.6bn) and investments of Dkr 18bn-21bn ($2.6bn-$3bn) will, however, be split between continuing and discontinuing operations.

The Danish state owns 50.1% of Dong Energy. Its annual results and Capital Markets Day are scheduled for February 2.

Ormen Lange subsea layout (Graphic credit: Dong Energy)

Dong’s oil and gas in 2015 averaged 115,000 boe/d, of which 90% from Norway and 10% from Denmark. The company’s largest Norwegian asset is a 14% stake in the giant Shell-operated Ormen Lange gasfield, producing since 2007.

The UK West of Shetland Laggan-Tormore gas field (Dong stake 20%) began producing February 2016; it is operated by Total.

Dong's largest minority shareholders include a subsidiary of US bank Goldman Sachs (New Energy Investment), US investor The Capital Group, and Denmark's SEAS-NVE Holding. 

Mark Smedley