Dong Energy to quit oil and gas business in favour of renewables

Dong Energy has announced it will exit from its oil and gas business to focus on renewables. The group said there is currently no timetable for the completion of the process.

In its financial results for the first three quarters of 2016, the group reported a 10 per cent drop in revenue to DKK 49.7 billion, compared with the previous year. It said this was due primarily to significantly lower oil and gas prices and lower gas sales, and was partially offset by higher activity from construction contracts in wind power which saw revenue from construction contracts double.

Generation from offshore wind power amounted to 4.2TWh, in line with the first three quarters of 2015, as generation from new offshore windfarms was offset by lower wind energy content than in the same period in 2015 (88 per cent compared with 96 per cent) and lower availability.

Meanwhile, oil and gas production amounted to 27.6 million barrels of oil equivalent in 9M 2016, down from 29.3 million in 9M 2015.

Operating profits (EBITDA) increased by 16 per cent to DKK 17.2 billion in 9M 2016, with wind power accounting for DKK 2.4 billion of this increase.

Gross investments amounted to DKK 5.6 billion in Q3 2016, 70 per cent of which were in the development and construction of windfarms: Burbo Bank Extension, Walney Extension and Race Bank in the UK, and Borkum Riffgrund 2 in Germany.

The company completed the farm down of Burbo Bank Extension in Q1 2016, and is currently in the process of farming down its Race Bank and Walney Extension projects. It expects to either complete one of these in Q4 2016 and one in 2017 or both during 2017.

“Based on the achieved EBITDA up until September, including lump sums of DKK 3.8 billion from gas contract renegotiations, we expect to be within the EBITDA range of DKK 20-23 billion even in a scenario where no additional farm down is completed in 2016,” the group said.