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Dong Energy posted a profit of DKK 3.3 billion in Q3 2016, DKK 2.9 billion higher year on year.
The increase was driven by higher EBITDA, lower depreciation and a DKK 1.3 billion gain from the divestment of the gas distribution grid to Energinet.dk, the company said in a statement Monday.
Operating profit (EBITDA) increased by 7% to DKK 4.8 billion in the same period. The increase was “driven by a 19% increase in wind power and a positive effect from a lump sum payment received in connection with the completed renegotiation of a gas purchase contract” the company said, adding however that the positive results was “partially offset by lower oil and gas prices and reduced volumes from the Ormen Lange field.”
Oil&Gas divestment plans continue
Dong maintains an outlook for 2016 of DKK 20-23 billion in EBITDA and gross investments of DKK 18-21 billion, said the CEO and President, Henrik Poulsen.
He reiterated the company has decided “to initiate a process with the aim of ultimately exiting from our oil and gas business.”
“This should be seen in the context of Dong Energy’s strategic transformation towards becoming a global leader in renewables and a wish to ensure the best possible long-term development opportunities for our oil and gas business” he explained, adding however that “there can be no assurance as to the outcome or the timing of the completion of the process.”
He said meanwhile, the O&G division continued the “substantial restructuring of the business and delivered a strong operational performance in the first nine months.”
“Cost performance continues to improve, driven by continued renegotiation of supplier contracts, reduced exploration spending and improved operational efficiency, with total cash spend decreasing by 36% compared with the same period last year” he pointed out, adding the division is expected to be cash flow positive in 2016 “a year earlier than previously communicated.”
Wind projects on track
For renewables, Dong has currently seven large offshore wind farms under construction for total capacity of 4.4 GW, with the programme looking “well on track.”
In addition, it is continuing to plan “offshore wind project opportunities for the period beyond 2020” Poulsen said.
Recent developments include the inauguration of the biomass-converted Studstrup plant in October.
Meanwhile, the biomass conversion at Avedøre is progressing according to plan and is expected to be finalised in Q4, while the opening of the bio-converted Skærbæk plant will take place in 2017, he explained.
In addition, the construction of the biomass Renescience plant in the UK is “on schedule and we expect to inaugurate the plant in 2017,” he said.
Furthermore, in August the UK government granted Dong permission to build the Hornsea Project, which consists of two offshore wind farm, located 89 km off the Yorkshire coast. The project will have a capacity of up to 1.8 GW and consist of up to 300 turbines. It will be able to meet the electricity needs of approximately 1.6 million UK homes to participate in future auctions for CfDs in the UK, Dong said.
