LONDON (ICIS)--INEOS has agreed to acquire the oil and gas business of Danish DONG Energy for $1.05bn, plus a contingent payment of up to $250m, the Switzerland-headquartered producer said on Wednesday.
The business being acquired has a portfolio of long life assets, producing 100,000 barrels of oil equivalent (boe) per day in 2016, and with around 570m boe of commercial and potential oil & gas reserves across the Danish, Norwegian and UK Continental Shelves, INEOS said in a statement.
The contingent payment refers to $150m related to the Fredericia stabilisation plant, and a contingent payment of up to $100m subject to the development of the Rosebank field, the statement said.
“INEOS has much to offer this business, bringing its proven track record in operating complex assets of this nature to further maximise the economic recovery of the hydrocarbons in the acquired portfolio” the statement said.
The acquisition, INEOS said, will enable it to significantly expand its trading and shipping activities. Making it a major trader in the sector.
“DONG Energy’s Oil & Gas business is a natural fit for INEOS as we continue to grow our upstream activities,” said INEOS chairman Jim Ratcliffe.
“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.
“This business is very important to us at this stage of our growth plans and we are delighted with the expertise that comes with it. We have been successful in our petro-chemical businesses, focusing on operating our assets safely, efficiently and reliably and we intend to do the same with our oil & gas assets.
“We are keen on further growth and already see lots of opportunity within this impressive portfolio when it transfers to INEOS.”
The acquisition and transfer of ownership is targeted to complete within the third quarter of 2017, subject to regulatory and third party approvals, INEOS said.
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 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.”Additional reporting by Tahir Ikram
(update adds more detail from INEOS plus comment from Dong Energy)
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