Increased cost related to Siri platform repair - Still a solid business case

DONG Energy A/S  / Miscellaneous

18.04.2012 13:18

Dissemination of a UK Regulatory Announcement, transmitted by
DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
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As announced in June 2011 DONG Energy is implementing a permanent repair
solution necessary to restore the integrity of the Danish North Sea platform
Siri. 

Following the progress of the project, the repair cost estimate has been
increased from the initial expected DKK 2 billion to DKK 3.5 billion of which
DKK 0.6 billion was incurred in 2011. For the remaining part (DKK 2.9 billion),
the distribution between 2012 and 2013 is dependent on the progress of the
project which is still uncertain. Currently, the expectation is that two-thirds
will be incurred in 2012 and the one-third in 2013. 

Flemming Horn Nielsen, Vice President and responsible for DONG Energy's Danish
oil and gas activities, underlines that the chosen repair solution and
continued operation of the Danish North Sea platform Siri is still a solid
business case despite increased cost of the repair work: 

'The Siri area still holds valuable reserves and offers further upside
opportunities for new reserves in the wider area. The repair project has been
necessary to maintain a high safety and environmental standard for the Siri
platform, which will function as a host for a number of fields in the area for
many years to come', Flemming Horn Nielsen said. 

The cost has changed mainly due to the fact that the required repair solution
is not an 'off-the-shelf' repair job, but a complex work involving new
techniques in offshore settings. During the project progress changes to the
detailed design and engineering has had a large impact on the fabrication and
installation. 

The background for the repair work is that DONG Energy during a routine
inspection in August 2009 discovered cracks in the nose of the subsea oil tank
of the Siri platform. No pollution happened but the production was shut down
for five months as a safety measure and re-started January 2010 after a
temporary solution had been installed. 

Production from the Siri field and the processing of oil from the Siri area
(today from the fields Nini, Nini East, Stine and Cecilie) is expected to
continue at normal levels during the repair. However due to increased safety
measures more outage time in 2012 and 2013 could be expected. 

Insurance claims related to sue and labour and permanent repair work are in
process, but have not been settled. DONG Energy has not included any impact of
insurance claims in the cost estimate and hence in the financial guidance. 

The information provided in this announcement does not change DONG Energy's
previous financial guidance for the 2012 financial year or the announced
expected investment level. Also the financial guidance for 2013 with EBITDA
being significantly ahead of 2012 remains unchanged. 


For additional information, please contact:

Media Relations
Ulrik Froehlke
+45 9955 9560

Investor Relations
Morten Hultberg Buchgreitz
+45 9955 9750


DONG Energy is one of the leading energy groups in Northern Europe. We are
headquartered in Denmark. Our business is based on procuring, producing,
distributing and trading in energy and related products in Northern Europe. We
have approximately 6,000 employees and generated DKK 57 billion (EUR 7.6
billion) in revenue in 2011. For further information, see www.dongenergy.com.

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Language:           English
Company:            DONG Energy A/S
                    
                     
                    Dänemark
Phone:              
Fax:                
E-mail:             
Internet:           
ISIN:               XS0253170335
Category Code:      MSC
LSE Ticker:         65XG
Sequence Number:    1048
Time of Receipt:    Apr 18, 2012 13:18:38
 
End of Announcement                             DGAP News-Service
 
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