$10 Billion Oil Merger in the Works

CBJ — 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.

Maersk is working with Bank of America on the potential deal, while JP Morgan is assisting Dong Energy.

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. 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. Maersk has previously held talks about buying a large part of the North Sea portfolio that Shell is looking to sell as part of a divestment plan.

DONG Energy said this month it was putting its oil and gas assets up for sale, as it wants to shift away from fossil fuels toward offshore wind. DONG’s cash flow at its oil and gas business breaks even at $35 per barrel. It has been producing 89,000 barrels of oil and gas per day this year, down from 115,000 barrels of oil and gas daily last year.