DONG Energy to sell oil, gas business to Ineos for $1.3 bln – Nasdaq


UPDATE 1-DONG Energy to sell oil, gas business to Ineos for $1.3 bln

(Adds company, analyst comments, detail, background)
    COPENHAGEN, May 24 (Reuters) - Danish utility and offshore
wind farm developer DONG Energy <DENERG.CO> said Wednesday it
had agreed to sell its oil and gas business to petrochemicals
firm Ineos for $1.3 billion, the latest in a string of North Sea
    For DONG Energy, the world's biggest operator of offshore
wind power, the sale marks a step away from fossil fuels as it
seeks to focus solely on offshore wind.
    "The transaction completes the transformation of DONG Energy
into a leading, pure play renewables company," DONG Chief
Executive Henrik Poulsen said in a statement.
    The sale deals a blow to shipping group A.P. Moller-Maersk
<MAERSKb.CO>. In December, Reuters reported talks between DONG
and Maersk to merge their oil and gas business had stalled after
the two Danish firms could not agree on a price. [nL5N1E92Z8]
    Ineos, which already owns the Grangemounth refinery in
Scotland and last month bought the Forties pipeline system in
the North Sea from BP <BP.L>, had been looking to expand into
exploration and production.
    Deal making in the North Sea has picked up in recent months
amid steadier oil prices, following a slump that brought
transactions to a halt in the ageing basin.
    Ineos joins a number of private equity-backed companies such
as Chrysaor and Siccar Point that have in recent months acquired
large assets in the North Sea from operators such as Royal Dutch
Shell <RDSa.L> and Austria'sOMV <OMVV.VI>.
    Also earlier this month, Neptune Oil & Gas agreed to buy a
majority stake in French utility Engie's <ENGIE.PA> exploration
and production business for $3.9 billion.
    Ineos will take over decommissioning liabilities of around 7
billion Danish crowns ($1.05 billion), DONG said, but DONG will
retain all hedge contracts related to the oil and gas business,
which had a market value of 1.9 billion crowns by end-March.
    Nordea analysts said the deal price was slightly below their
expectations, but thought investors had probably already
factored in a lower valuation. They have a "buy" rating on DONG
shares, which were up 1.8 percent in early trade.
    DONG produced 100,000 barrels of oil and gas per day in
2016, down from 115,000 in 2015. Its main producing assets
include the Ormen Lange, Syd Arne and Laggan-Tormore fields.
    Several private equity funds, including EIG Global Energy
Partners, had also shown interest in DONG's oil and gas
business, according to banking sources.
    ($1 = 6.6595 Danish crowns)

 (Reporting by Jacob Gronholt-Pedersen and Teis Jensen; Editing
by Mark Potter)
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