DONG Energy said it reached a settlement with Daewoo Shipbuilding & Marine Engineering and Technip over which company bears responsibility for construction errors concerning an offshore platform for the idled Hejre Field, which is in the North Sea.
The settlement clears a major hurdle for the Danish company's plans to divest its oil and gas unit to focus on its growing business of offshore wind farm development.
DONG said in a statement that the agreement will reduce the 2.5 billion Danish crowns (US$367 million) of provisions it made in relation to the Hejre Field ahead of its listing, which was one of the largest in the world, in 2016.
It will also have a positive impact of about 900 million crowns on operating profit in DONG's discontinued operations, which is a business area not included in the full-year financial guidance, the company said.
"It is a significantly better deal than what they had dared to hope for when they made the provisions," Sydbank analyst Morten Imsgard said.
"It is also positive with regards to taking the sale [of the oil and gas unit] further, as you don't have to discuss an additional risk now," Imsgard said.
DONG said it was uncertain whether the Hejre project, which was halted more than a year ago, would resume. It estimates the field holds 171 million barrels of oil equivalent.
"The settlement does not affect the ongoing assessment with Bayerngas on redevelopment alternatives for the Hejre Field," DONG said.
During the week of April 27, DONG reiterated that it expects to divest the oil and gas unit this year.
Independent oil exploration company Cairn Energy and Danish shipping and oil conglomerate A. P. Moller-Maersk have been mentioned by sources familiar with the matter as being among potential buyers for the oil and gas interests, which could be worth about US$2 billion.
(US$1 = 6.8066 Danish crowns)