​DONG Energy has agreed to divest the entire share capital of DONG E&P A/S to INEOS for an unconditional payment of USD 1,050 million (DKK 7.0 billion) on a cash and debt free basis, a contingent payment of USD 150 million (DKK 1.0 billion) related to the Fredericia stabilisation plant and a contingent payment of up to USD 100 million (DKK 0.7 billion) subject to the development of the Rosebank field.

INEOS will, by acquiring DONG E&P A/S, take over decommissioning liabilities of approximately DKK 7.0 billion. DONG Energy will retain all cash flows until 30 June 2017 (free cash flow was DKK 2.1 billion in Q1, 2017) and retain all hedge contracts related to the Oil & Gas business (market value was DKK 1.9 billion as at 31 March 2017).

Completed transformation into a renewables company
Henrik Poulsen, CEO of DONG Energy, 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 & Gas business. With the agreement with INEOS we’ve obtained just that.”

Henrik Poulsen concluded: “The transaction completes the transformation of DONG Energy into a leading, pure play renewables company.”

The transaction is expected to result in a gain on sale of enterprises of DKK 2.5 billion which includes the contingent payment related to the Fredericia stabilisation facility. The gain will be presented as part of net profit from discontinued operations in DONG Energy's financial statements after closing.

Of the USD [1,050] million unconditional consideration, USD 250 million (DKK 1.7 billion) will be payable from 2018 to 2020.
Closing of the transaction is subject to regulatory approvals and certain other third party approval is expected to take place in the third quarter of 2017.

At closing of the transaction, approximately 440 employees of the DONG Energy group working for Oil & Gas will transfer to employment with the INEOS group.

About Dong Energy

Based in Denmark, DONG Energy (NASDAQ OMX: DENERG) is one of Northern Europe’s leading energy groups. Approximately 6,500 dedicated employees work with developing, constructing and operating offshore wind farms, producing power and heat from our power stations, supplying energy to private and business customers and producing oil and gas.

About INEOS

INEOS will be the sole operator of the three licenses awarded today. Shale gas extraction has transformed communities in the USA where landowners own the mineral rights under their property. INEOS has developed an industry leading community benefits package that seeks to replicate this, giving communities a real stake in development. INEOS has promised to share 6% of revenues. Four percent of this would go to homeowners and landowners in the immediate vicinity of a well, and a further 2% to the wider community. Based on our estimates, a typical 10km by 10km development area would generate £375m for the community over its lifespan. Overall we anticipate that our future shale gas business could contribute over £2.5bn to communities under this scheme, having a material impact on regional economies and the standard of public services.

INEOS recognises that shale gas extraction is a controversial issue and communities have understandable questions about the potential risks and rewards. We will engage comprehensively and openly with communities at every stage to accurately convey the risks and rewards, so they can make an informed judgment about extraction. It is the view of mainstream scientific authorities such as the Royal Society and Royal Academy of Engineering that shale gas can be extracted safely with appropriate regulation, and there could be real benefits from doing so, including jobs, tax revenue, local investment and improved energy security. It is vital to have a thorough and evidence-based conversation to ensure this opportunity is considered properly.