DONG Pushing On with Oil & Gas Unit Sale, in Merger Talks with Maersk

Following the appointment of J.P. Morgan to asses the market conditions for a potential sale of its oil and gas business, DONG Energy is now reportedly in negotiation with Maersk over a merger of their fossil fuel units, as DONG is focusing fully on offshore wind and Maersk on transport and logistics. 

The merger would result in a business worth more than USD 10 billion (approx. EUR 9.44 billion) including debt, according to Reuters, who cited its sources familiar with the matter and further said the two companies were also in talks last year as Maersk looked into buying DONG Energy’s oil and gas unit, but they could not agree on the price.

In its financial results for the third quarter, DONG Energy reported a 7% increase of its operating profit (EBITDA), but pointed out that the results were partially offset by lower oil and gas prices and reduced volumes from the Ormen Lange field. With the the Q3 results release at the beginning of this month, Henrik Poulsen, DONG’s CEO and President, said that DONG had decided to start a process with an aim of ultimately exiting from its oil and gas business. 

“This should be seen in the context of DONG Energy’s strategic transformation towards becoming a global leader in renewables and a wish to ensure the best possible long-term development opportunities for our oil and gas business,” Poulsen said. ”We currently have seven large offshore wind farms under construction. The construction programme totalling 4.4GW is well on track. In parallel, we continue to shape our pipeline of offshore wind project opportunities for the period beyond 2020.”

DONG (Dansk Olie og Naturgas/ Danish Oil and Natural Gas) became DONG Energy in 2006 with the merger of six Danish energy companies: DONG, Elsam, Energi E2, Nesa, Københavns Energi and Frederiksberg Forsyning. “Since DONG Energy was formed in 2006, we have changed from one of the most coal-intensive utilities in Europe to a global leader in renewable energy,” the company states on its website.

The offshore wind developer has recently hit the media headlines as the winner of the first Borssele tender in the Netherlands, where the company offered a very low price and made the Borssele I & II one of the cheapest offshore wind farms so far.