DONG earnings from oil-indexed natural gas contracts drop in Q1‘12
Crude oil's growing premium over natural gas prices resulted in low earnings from gas activities via oil-indexed contracts in the first quarter of the year for DONG Energy, the Danish company said on Friday.
An average year-on-year hike of 13% to €118/bbl was recorded in oil prices in Q1 '12, while the Dutch TTF gas price averaged €24/MWh, only 3% higher on average than in the same period in 2011, the company said.
Oil and gas production rose by 5% year on year to 6.8 million barrels of oil equivalent (boe), primarily from the Norwegian Ormen Lange field, where production rose by 7% to 4.5 million boe, representing 66% of DONG's total output.
Investment totalled Danish kroner (DKr) 5.1bn (€680m), of which DKr1.2bn was channelled into natural gas and oil field developments. Investment projects included infrastructure at Norwegian gas fields such as Oselvar, where DKr400m was spent, and Marulk and Ormen Lange, which each benefited to the tune of DKr200m, and the Danish Syd Arne field.
DONG recorded a 25% decline in its earnings before interest, taxes, depreciation and amortisation (EBITDA) to DKr3.6bn during the quarter.
Despite the decline in earnings, the company achieved a 56% year-on-year increase in profits to DKr2.3bn, mainly due to asset sales worth DKr2.0bn after tax.
However, DONG's acting CEO, Carsten Krogsgaard Thomsen, said the company's 2012 outlook remained unchanged and that it was still aiming to double its 2009 EBITDA by 2015. KA
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