ANNUAL REPORT 2011 - DONG Energy

fInancIal outlook FOR 2012
External assumptions and
market conditions
Europe is still affected by the economic crisis, not least by
the government debt crisis in Southern Europe. The future
price development and energy demand are therefore subject
to particular uncertainty.
Market prices and hedging
The movements in a variety of market prices, including oil,
gas, electricity, coal, CO and the USD and GBP exchange
2
rates, impact on DONG Energy’s financial performance.
The profit outlook for 2012 is based on the average market
prices in the table.
A large portion of market price exposure in 2012 has
been hedged, which means that any deviations from assumed
prices will not filter through in full to financial performance.
Price hedging of oil and gas is carried out after
adjustment for hydrocarbon taxation (primarily in Norway)
to achieve the desired cash flow effect after tax. As will be
seen from the table below, DONG Energy’s overall exposure
to changes in energy prices is limited from a short-term
perspective. All other things being equal, a concurrent 10%
increase in prices will change EBITDA by around DKK 0.8
billion in 2012. The corresponding change in EBITDA after
hydrocarbon taxation is around DKK 0.2 billion.
Hedging 2012
Before
hydrocarbon tax
market prices
(average)
Hedging percentage
After
hydrocarbon tax Avg. hedging price
estimate
2012
10% price increase
(DKK million)
Oil USD/bbl 10% 28% 86 276
Gas EUR/MWh 53% 91% 23 366
Thermal electricity generation
(GDS/GSS) EUR/MWh 56% 56% 10/6 38
Renewable generation, market
price share 1 EUR/MWh 32% 32% 61 82
1 Fixed tariffs and guaranteed minimum prices for green certifi cates account for approx. 2/3 of expected revenue from the wind power portfolio.
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manaGEmEnt’s rEviEw – DONG ENERGY GROUP ANNUAL ANNUAL REPORT REPORT 2011 2011
Actual
2011
Oil, Brent USD/bbl 105 111
Gas, TTF EUR/MWh 23 23
Gas, NBP EUR/MWh 23 22
Electricity, Nord Pool
system EUR/MWh 37 47
Electricity, Nord Pool, DK 1 EUR/MWh 46 49
Electricity, EEx EUR/MWh 52 51
Electricity, UK EUR/MWh 53 55
Coal, API 2 USD/tonne 112 122
CO 2 , EUA EUR/tonne 7.1 13.3
Green dark spread, DK 1 EUR/MWh 8.2 5.0
Green spark spread, UK EUR/MWh 4.6 7.8
Green spark spread, NL EUR/MWh 2.5 4.0
USD exchange rate DKK/USD 5.7 5.4
Source: Platts, Argus, Nord Pool, LEBA, ECx.
1 Based on average prices in DK1 and DK2.
FORWARD-LOOKING STATEMENTS
The report contains forward-looking statements,
which include projections of financial performance
in 2012. These statements are not guarantees
of future performance and involve certain
risks and uncertainties. Therefore, actual future
results and trends may differ materially from what
is forecast in this report due to a variety of factors,
including, but not limited to, changes in temperature
and precipitation levels; the development
in oil, gas, electricity, coal, CO 2 , currency
and interest rate markets; changes in legislation,
regulation or standards; changes in the competitive
environment in DONG Energy’s markets; and
security of supply. Reference is made to the chapter
on Risk and risk management, and notes 32
and 33 to the consolidated financial statements.