Ineos to buy DONG Energy’s oil, gas business for $1.3 billion

Ineos AG has agreed to acquire DONG Energy AS’s oil and gas business for an unconditional payment of $1.05 billion plus contingent payments of $150 million related to the Fredericia stabilization plant and as much as $100 million subject to development of Rosebank field.

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Ineos AG has agreed to acquire DONG Energy AS’s oil and gas business for an unconditional payment of $1.05 billion plus contingent payments of $150 million related to the Fredericia stabilization plant and as much as $100 million subject to development of Rosebank field.

DONG’s oil and gas production in 2016 averaged 100,000 boe/d, of which 70% came from its Norwegian fields and 15% came from each of its Danish fields and UK West of Shetland fields. The business has shares in 50 licenses and 10 producing fields, primarily built around Ormen Lange, Laggan-Tormore, and Syd Arne fields. The assets include 570 million boe of commercial and potential oil and gas reserves.

Ormen Lange gas field, the largest field in DONG’s portfolio, is 120 km northwest of Kristiansund, Norway, in 800-1,100 m of water with gas located 2 km into the subsoil. The development project was initiated in 2003 and the field was put in production in 2007. DONG has 14% interest in the field.

In addition to the Syd Arne area that includes Lulita field, the Denmark assets contain a presence in the Siri area, including Nini, Nini East, and Cecilie fields. Ineos says the Danish Continental Shelf “also offers a significant set of development opportunities in the form of Hejre-Solsort-related reserves which will be a major focus of the business going [forward].”

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In addition to the producing Laggan and Tormore gas fields, where production started in 2016, the UK assets include Edradour and Glenlivet fields that are being developed West of Shetland and oil and gas discoveries in Rosebank. Development of Laggan-Tormore also comprise a gas transport system to Scotland via the Shetland Islands. Ineos notes the system “provides an opportunity for existing and future discoveries in the area.”

Ineos, a major petrochemical manufacturer, says the assets complement its existing upstream activities formed through the 2015 acquisitions of UK assets from DEA Deutsche Erdoel AG and Fairfield Energy Ltd. (OGJ Online, Oct. 12, 2015; Oct. 28, 2015). They also complement its recent purchase of the Forties Pipeline system from BP PLC (OGJ, Apr. 17, 2017, p. 25). The deal will enable Ineos to expand its trading and shipping activities.

On completion of the deal, expected in the third quarter, 440 employees will transfer to Ineos, which also will take over decommissioning liabilities of $1.05 billion. DONG will retain all cash flows until June 30 and all hedge contracts related to the business.

Henrik Poulsen, DONG chief executive officer, said, “The transaction completes the transformation of DONG Energy into a leading, pure play renewables company.”

Contact Matt Zborowski at matthewz@ogjonline.com.

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