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Equinor (EQNR) Extends Offerings on Acquisition of Danske

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Equinor ASA (EQNR - Free Report) intends to acquire 100% of the shares in Danish energy trading company, Danske Commodities (DC). Per the agreement, Equinor will pay EUR 400 million in smaller contingent payments, subject to Danske’s performance over the next couple of years.

About Danske Commodities

Founded in 2004, Danske Commodities is based in Aarhus, Denmark, with a workforce of 284 employees. The company is active in short-term gas trading and offers energy market services. In 2017, the company dealt in 318 terawatt hours of electricity with 37 countries. This corresponds to more than two times of Norway’s electricity consumption per year. Danske also traded 389 terawatt hours of gas across 18 countries, which is equal to about 33% of the total Norwegian gas production. It executes more than 4000 trades and processes about 173 terabytes of data on a daily basis, 24 hours a day, 365 days a year.

On completion of the acquisition, Danske will be led by the existing CEO Henrik Lind for a minimum of 12 months.  The senior management group will also remain unchanged.

Acquisition Rationale

The company rebranded itself as Equinor from Statoil as they wanted to remove oil from the name. This is a recent trend followed by many energy players, which is in sync with the global move to reduce greenhouse gas emissions.

The latest acquisition underlines the above-mentioned strategy of the company to broaden offerings. Equinor intends to move from being an upstream oil and gas company to becoming a broad energy company. The company proposes to create a significant position in renewable energy and anticipates investing 15-20% of its capital expenditure in new energy solutions by 2030.

The transaction will allow both Equinor and Danske to create value along the complete electricity value chain by gaining from competencies of both. It will also provide Danske with a partner that understands its growth plans.

Price Performance

In the past three months, Equinor’s shares have gained 9.5%, outperforming the industry’s growth of 3.7%.



 

Zacks Rank & Other Stocks to Consider

Equinor currently sports a Zacks Rank #1 (Strong Buy). Other top-ranked players in the same sector include Occidental Petroleum Corporation (OXY - Free Report) , China Petroleum & Chemical Corporation (SNP - Free Report) or Sinopec and CVR Refining, LP (CVRR - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Occidental Petroleum is an international oil and gas exploration and production company. It pulled off an average positive earnings surprise of 30.2% in the last four quarters.

Sinopec is one of the largest petroleum and petrochemical companies in Asia. The company delivered an average positive earnings surprise of 492.8% in the trailing four quarters.

Sugar Land, TX-based CVR Refining is an independent downstream energy partnership with refining and associated logistics properties in the Midcontinent United States. The company delivered an average positive earnings surprise of 7.05% in the last four quarters.

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