Dong Energy said it is now a “pure play renewables company” after signing an agreement to divest its upstream oil and gas business to INEOS.
Dong agreed to divest the entire share capital of it’s upstream oil and gas business (known as Dong E&P A/S) to INEOS for an unconditional payment of $1,050m (DKK 7bn) on a cash and debt free basis, plus a contingent payment of $150 million (DKK 1bn) related to the Fredericia stabilisation plant and a contingent payment of up to $100m (DKK 700m) subject to the development of the Rosebank field.
INEOS will take over decommissioning liabilities of approximately DKK 7bn. Dong will retain all cash flows until 30 June 2017 and retain all hedge contracts related to the Oil & Gas business (market value was DKK 1.9bn as at 31 March 2017).
Henrik Poulsen, chief executive 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 and 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,” he added.
Closing of the transaction is subject to regulatory and certain other third party approvals and is expected to take place in the third quarter of 2017. At that point, approximately 440 employees working for DONG Energy Oil & Gas will transfer to employment with the INEOS group.
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