Dong Energy (CPH:DENERG) of Denmark Quits Oil and Gas Business

Dong Energy (CPH:DENERG), with its headquarters at Fredericia in Denmark, has said that they want to get out of the oil and gas business. They now want to focus completely on offshore wind power instead.

The business is putting up billions of dollars of gas and oil assets in the North Sea up for sale. No deadline, though, has been set for the sales of their oil and gas business. Dong also has assets in West of Shetland, which includes a 20 percent stake in the Laggan Tormore gas field. Production started earlier this year.

Listed in the Copenhagen exchange, Dong is already the biggest offshore wind power operator in the world.

Dong’s Production and Revenues Come Down

However, traditionally, Dong has been into oil and gas exploration, drilling, and gas distribution. Most of the business is owned by the Danish government. SEAS-NVE has 11 percent stake, Syd Energi has 7 percent, and there are some smaller shareholders who together own the balance 6 percent. The business currently employs close to 7000 people and as of 2015, has a turnover of 18.5 billion Danish Krones.

The business has however been making a loss in recent months. Last year, the per day production of oil and gas stood at 115,000 barrels. This year, however, Dong Energy’s (CPH:DENERG) production has come down to 89,000 barrels every day.

It was also revealed that the falling pound after Brexit has hit their plans of selling a 50 percent in the Race Bank offshore wind farm, just off the coast of Norfolk in England.

Henrik Poulsen, the Chief Executive said, “We want to get to the right transaction, that obviously provides value to shareholders and provides the oil and gas business with the right long term opportunities. We are still in a very early stage of exploring market interest, but it is our impression that there is interest in an asset of this kind”.

Dong Energy Is Not Alone

What Dong Energy is doing is much the same as other European utilities such as RWE AG (ETR:RWE) and E.ON (ETR:EOAN), both of Germany. They both have divested their gas and oil businesses to free up cash.

Wind energy along with solar energy is growing at a fast pace as the global reserve of fossil fuel is limited and it is going down each day. These renewable energies are seen as the future, as the world slowly moves towards them.