Maersk Oil negotiating merger with DONG Energy, establishing new 10-billion-dollar giant in oil and gas operations. The negotiations are in very early stages and no decision is expected until the end of the year. The both companies hired consultants, as Maersk Oil is working with Bank of America on potential deal, while Dong Energy is working with JP Morgan. The negotiations are under way, but there is no certainty that parties would come to agreement. A potential deal between Maersk Oil and DONG Energy will create offshore oil company with market capitalization of 10 billion USD, including debt, which will have large market stake in UK North Sea.
“We are in the very early stages of the sales process. There will be no sale before the end of the year and it is far too early to speculate over timing and indeed potential buyers”, said the spokesman for DONG Energy.
Last year, there were acquisition talks between Maersk Oil and DONG Energy’s oil and gas business, but the both companies failed to agree on price. In September 2016, Maersk said that planned to merge or spin-off its energy assets as part of a major restructuring, while DONG Energy said this month it was putting its oil and gas assets up for sale, as it wants to shift away from fossil fuels toward offshore wind.
Maersk Oil has suffered a series of setbacks, first and foremost when Qatar chose not to extend its 25-year license to operate the giant Al Shaheen field. On other hand, DONG Energy suffered from serious lack of cash flows and increasing debt due to the crisis in offshore oil sector and low oil prices.
DONG Energy is producing 89,000 barrels of oil and gas per day this year, down from 115,000 barrels of oil and gas daily last year.