DONG Energy to divest its upstream oil and gas business

DONG Energy has agreed to divest the entire share capital of DONG E&P A/S to INEOS for an unconditional payment of US$1,050 million on a cash and debt free basis, a contingent payment of US$150 million related to the Fredericia stabilisation plant and a contingent payment of up to US$100 million subject to the development of the Rosebank field.

INEOS will, by acquiring DONG E&P A/S, take over decommissioning liabilities of approximately DKK7.0 billion. DONG Energy will retain all cash flows until 30 June 2017 (free cash flow was DKK 2.1 billion in Q1, 2017) and retain all hedge contracts related to the Oil & Gas business (market value was DKK 1.9 billion as at 31 March 2017).

The transaction is expected to result in a gain on sale of enterprises of DKK2.5 billion (US$366 million) which includes the contingent payment related to the Fredericia stabilisation facility. The gain will be presented as part of net profit from discontinued operations in DONG Energy's financial statements after closing.

Of the US$1,050 million unconditional consideration, US$250 million will be payable from 2018 to 2020.

Closing of the transaction is subject to regulatory approvals and certain other third party approval is expected to take place in the third quarter of 2017.

At closing of the transaction, approximately 440 employees of the DONG Energy group working for Oil & Gas will transfer to employment with the INEOS group.

Henrik Poulsen, CEO of DONG Energy, said:

“Since the decision in 2016 to divest our upstream oil and gas business, we’ve actively worked to get the best transaction by selling the business as a whole, getting a good and fair price for it and ensuring the optimal conditions for the long-term development of the Oil & Gas business. With the agreement with INEOS we’ve obtained just that.

The transaction completes the transformation of DONG Energy into a leading, pure play renewables company.”