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Danish energy firm DONG Energy has decided to drop its oil and gas operations in order to focus exclusively on offshore windfarm construction and operation. The company had said in late October it did not consider its oil and gas business a core business, although it did not at the time say it would sell off that piece.
DONG Energy, which is behind plans for the world’s largest offshore windfarm that will be built in the Irish Sea, was formerly a state-owned entity, but went public in June this year. Its listing turned into the biggest IPO in Europe since the start of 2016.
DONG reported a massive increase in its profits for the third quarter of the year, with the figure at US$490 million (3.3 billion Danish kroner). In its interim earnings announcement released earlier today, DONG said its strategic goal remained becoming a world leader in renewable energy but, the company said, it also wanted to “…ensure the best possible long-term development opportunities for our oil and gas business.”
The company’s oil and gas assets may be worth up to US$2.056 billion (14 billion kroner), according to Sydbank analyst Morten Imsgard, as quoted by Reuters. The company said at the time of its listing that it would use cash flow from the oil and gas business to fund its expansion into wind power.
It would make sense, then that it would pick the buyer carefully, not rushing things, as suggested by another part of the interim report, which said that “…There can be no assurance as to the outcome or the timing of the completion of the [divestment] process.”
The oil and gas division of the company includes interests in 24 offshore field in Norwegian waters, plus stakes in another 14 in the Danish shelf. Reuters has suggested Statoil and AkerBP as possible buyers, as well as Denmark’s logistics giant A.P. Moeller-Maersk, which is currently spinning off its energy business, Maersk Oil, and is not excluding partnerships with other energy businesses as part of this process.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.