Denmark's A.P. Moller-Maersk and DONG Energy are in talks to merge their oil and gas operations in a deal that would create a business worth more than $10 billion including debt, sources familiar with the matter said.
Maersk is working with Bank of America on the potential deal, while JP Morgan is assisting Dong Energy, said the sources, who cautioned there is no certainty the parties would come to terms.
Maersk said in September it planned to merge or spin off its energy assets as part of a major restructuring and instead focus on its core transport and logistics businesses.
DONG Energy said in November that it was putting its oil and gas assets up for sale, as it wants to shift away from fossil fuels toward offshore wind.
Some analysts have said, however, that it could be hard to find buyers, with many other energy companies also putting assets up for sale due to low oil prices.
"The only thing that would make sense is a complete merger of their businesses," said one of the sources, who asked not to be names because the deliberations are private.
A spokesman for DONG said: "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."
Maersk, Bank of America, JP Morgan declined to comment.
Maersk held talks in 2015 on possibly buying DONG Energy's oil and gas business, but the companies failed to agree on a price, Bloomberg reported in September.
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.
DONG Energy's CEO Henrik Poulsen said in November that the company was "still in a very early stage of exploring market interest, but it is our impression that there is interest in an asset of this kind."
DONG has said cash flow at its oil and gas business breaks even at $35 per barrel (bbl). It has been producing 89 Mbbl/d of oil and gas in 2016, down from 115 Mbbl/d in 2015.
Maersk has previously held talks about buying a large part of the North Sea portfolio that Royal Dutch Shell Plc (NYSE: RDS.A) is looking to sell as part of a divestment plan.
Recommended Reading
Magnolia Appoints David Khani to Board
2024-02-08 - David Khani’s appointment to Magnolia Oil & Gas’ board as an independent director brings the board’s size to eight members.
BP Pursues ‘25-by-‘25’ Target to Amp Up LNG Production
2024-02-15 - BP wants to boost its LNG portfolio to 25 mtpa by 2025 under a plan dubbed “25-by-25,” upping its portfolio by 9% compared to 2023, CEO Murray Auchincloss said during the company’s webcast with analysts.
The OGInterview: Petrie Partners a Big Deal Among Investment Banks
2024-02-01 - In this OGInterview, Hart Energy's Chris Mathews sat down with Petrie Partners—perhaps not the biggest or flashiest investment bank around, but after over two decades, the firm has been around the block more than most.
Petrie Partners: A Small Wonder
2024-02-01 - Petrie Partners may not be the biggest or flashiest investment bank on the block, but after over two decades, its executives have been around the block more than most.
BP’s Kate Thomson Promoted to CFO, Joins Board
2024-02-05 - Before becoming BP’s interim CFO in September 2023, Kate Thomson served as senior vice president of finance for production and operations.