Dong Energy, the Danish state-backed utility preparing for an initial public offering, said the rout in oil markets will force it to write down the value of a unit that had been the focus of spin-off speculation.
Dong will write down its exploration and production division by 16 billion kroner ($2.3 billion), but said it will keep the unit as it continues to prepare for an IPO that is due to take place early next year.
The decision follows a strategic review by JPMorgan of the E&P unit. Several analysts had speculated that Dong’s owners, which besides the Danish state include Goldman Sachs and pension funds ATP and PFA, would opt to spin off the E&P unit in order to offer potential Dong shareholders a company focused on green energy.
“It’s natural that Dong Energy, as is the case with other companies in the industry, adjusts to the market conditions for oil and gas,” Finance Minister Claus Hjort Frederiksen said in an e-mail.