Dong Energy eyes sale of oil and gas business

Denmark's Dong Energy, a major operator of offshore wind farms, said on Wednesday that it was eyeing a sale of its oil and gas business in the North Sea.

Dong Energy eyes sale of oil and gas business
Photo: Dong Energy A/S
The group said in a statement that it was “reviewing strategic options regarding the future of the oil and gas business” and that JP Morgan had been hired “to conduct a preliminary market assessment”.
“However, Dong Energy has not made a decision to divest the oil and gas business,” it said.
Ahead of its IPO in June this year, the group, which is 50.1 percent owned by the Danish government, told investors that the oil and gas business “was not considered a long-term strategic commitment”.
Energy distribution accounts for 55 percent of Dong's revenue while 30 percent comes from wind power.
The group has not made an annual profit since 2011 but shifted to a 4.1 billion kroner (555 million euros, $602 million) profit in the first half of this year.

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Denmark’s Dong Energy profits soften as wind drops

Denmark's leading wind energy group Dong Energy said Thursday earnings fell in the first quarter, partly because winds were not up to snuff at the start of the year.

Denmark's Dong Energy profits soften as wind drops
Photo: Erik Refner/Scanpix

Net profit fell by 47 percent to 3.19 billion kroner (429 million euros), and turnover by one percent to 17.42 billion.

A month of January “with weak winds” caused a lull in production, although February and March were “close to a normal wind year”, it said.

READ ALSO: Dong gets nod for 'world's biggest offshore wind farm'

Dong said earnings also suffered by comparison to a particularly strong year-earlier quarter when the renegotiation of gas purchase contracts and the sale of its gas distribution boosted income.

Dong shares swiftly ran into headwinds on the Copenhagen stock exchange in reaction Thursday, falling 1.9 percent in morning business.

The results for offshore wind, which the group considers its core business, deteriorated with a 19 percent decline in turnover and a 26 percent drop in gross operating income (EBITDA).

But Dong boosted its wind power production by 24 percent to 2.1 terawatt hours thanks to a rise in its capacity in mainly Germany and Britain.

READ ALSO: Denmark's Dong Energy to ditch coal by 2023

We are seeing significant momentum in the offshore wind industry, with innovation and notably reduced costs creating new market opportunities and an ever-stronger value chain. Competitive intensity is escalating,” CEO Henrik Poulsen said in a statement.

The group welcomed the strong contribution of an activity it wants to spinoff, oil and gas, thanks to a “high and stable production” and a 70 percent cut in investments.

Poulsen reiterated the company still aims to sell this business this year, without giving any indication of a possible buyer. 

READ ALSO: New probe of Denmark's Dong sale to Goldman Sachs