Hess offloads Denmark assets to Ineos for $150 million

U.S. oil and gas company Hess Corporation has entered into an agreement to sell its subsidiary Hess Denmark to Ineos E&P for a total consideration of $150 million. Hess will use the proceeds for Guyana projects.

Hess Denmark holds a 61.5 per cent interest in the South Arne field. The transaction has an effective date of 1 January 2021.

The South Arne field produced an average of 5,800 barrels of oil equivalent per day net to Hess in the fourth quarter of 2020.

“The sale of our Denmark asset enables us to further focus our portfolio and strengthen our cash and liquidity position”, CEO John Hess said on Thursday.

“Proceeds will be used to fund our world-class investment opportunity in Guyana”.

In a separate statement on Thursday, Ineos said that the purchase of Hess’ stake in the South Arne field complements the 36.8 per cent share Ineos already holds and 4.8 per cent in the Ineos-operated Solsort field.

As explained by Ineos, the acquisition strengthens its portfolio, improves its balance of oil and gas assets, provides opportunities for organic growth, and unlocks operational and cost synergies in the basin.

This is the first deal to be announced following the formation of the new Ineos Energy business, which incorporates Ineos’ Oil and Gas business.

Approximately 60 people will transfer to Ineos on completion of the deal, which is expected in the third quarter of this year, subject to government approval.

Ineos currently operates the Siri field area in Denmark. By becoming the operator of South Arne Ineos expects to unlock the operational and cost synergies between the two assets.

With this acquisition, Ineos also plans to add further value through organic growth projects, which will further extend the life of the asset within the context of the Danish Government’s decision to cease production on the Danish shelf by 2050.

Brian Gilvary, Executive Chairman of INEOS Energy said, “This deal represents a major step in reshaping our energy business. Hess was one of the earliest pioneers in developing this basin. This deal will open up future growth prospects that can be developed in Denmark’s offshore oil and gas sector, supported by a very promising carbon storage project helping to deal with future emissions.

“The Greensands project in Denmark will make a significant contribution to our understanding and growth of carbon storage technology, whilst supporting Denmark’s wider CO2 emission reduction targets for 2030 and beyond”.

To remind, a Danish North Sea reservoir and infrastructure last November were determined suitable for geological CO2 storage, as part of the Project Greensand with Wintershall Dea, Ineos, and Maersk Drilling as its members.

The consortium is working to mature one of the most progressed carbon capture and storage projects inside Danish jurisdiction and targets the development of CO2 storage capacity offshore Denmark based on reusing discontinued offshore oil and gas fields for permanent CO2 storage.