Dong Energy this morning confirmed it had sold off the entirety of its upstream oil and gas business to Ineos for $1billion.
It includes 50 licences in Denmark, Norway and the UK and 100,000 barrels of oil equivalents per day.
The move is part of Dong Energy’s quest to be a pure play renewables company, according to its chief executive.
Henrik Poulsen 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.”
The deal places Ineos in the top 10 ranking of producers in the North Sea. It also cements it as the largest private company in the North Sea.
Jim Ratcliffe, Ineos chairman, said: “Dong Energy’s Oil & Gas business is a natural fit for Ineos as we continue to grow our Upstream activities. We are pleased to acquire this competitive, well run business, with its highly successful and experienced team, a strong portfolio of long life assets and a very good mix of existing production and developments across the North Sea.”
Of the $1bn, $250million will be payable from 2018 to 2020.
Under the deal, 440 Dong Energy employees will transfer to Ineos.
Ineos will also takeover the decommissioning liabilities as part of the deal. Dong will retain cash flows until the end of the June.
Last year, 70% of Dong’s production came from Norwegian fields, about 15% production from Danish fields and another 15% production from the West of Shetland fields in the UK.
J.P. Morgan acted as exclusive financial adviser to Dong Energy in connection with the transaction.
The deal is expected to close in the third quarter of this year.