After recently announcing it was no longer considering oil and gas as a long-term strategic commitment, Danish energy giant Dong Energy has confirmed it is exiting the oil and gas business to focus on renewables.
Namely, the company stated in late October that its strategic future lied with the development of a clean energy portfolio based on competencies in offshore wind, bioenergy and green distribution and customer solutions.
In its interim financial report for 9M 2016 on Tuesday, Dong said the process to ultimately get rid of the oil and gas business has been initiated.
Henrik Poulsen, CEO and President, said: “We have decided to initiate a process with the aim of ultimately exiting from our 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. There can be no assurance as to the outcome or the timing of the completion of the process.”
Dong’s profit for the period amounted to DKK 3.3 billion in 3Q 2016, DKK 2.9 billion higher than in 3Q 2015. When it comes to the company’s oil & gas business, Dong’s profit during the third quarter 2016 was DKK 1.66 billion, a decrease from DKK 2.9 billion in 3Q 2015.
The company’s revenue amounted to DKK 49.7 billion in 9M 2016. The 10% decline on the previous year was due primarily to significantly lower oil and gas prices and lower gas sales.
Referring to the oil & gas business performance during the period, Poulsen said: “Cost performance continues to improve, driven by continued renegotiation of supplier contracts, reduced exploration spending and improved operational efficiency, with total cash spend decreasing by 36% compared with the same period last year. We now expect O&G to be cash flow positive in 2016, a year earlier than previously communicated.”
Offshore Energy Today Staff