The marginal increase reflected two opposing effects: gas and oil production was significantly ahead of the first quarter of 2008, while oil and gas prices were significantly lower.

Gas production was up 96% on the same period in 2008, amounting to 3.6 million boe. The increase came predominantly from the Or-men Lange gas field and was due to the commissioning of several production wells. The field came on stream in October 2007.

Power generation was 19% ahead at 5,824 GWh. Thermal generation was up as a consequence of higher green dark spreads. The increase was partly offset by a decline in renewables production as a result of less productive wind conditions. Gas sales (excluding own consumption at power stations) de-creased by 2% to 31,898 GWh.

The decrease was largely due to lower demand for gas as a result of the economic recession. Gas prices decreased throughout the quarter, and the low prices on gas hubs led to large wholesale customers reducing their purchases from DONG Energy, buying gas on gas hubs instead. Price hedging had a positive effect of DKK303 million in the first quarter of 2009 compared with a negative effect of DKK225 million in the first quarter of 2008.

Hedging of oil and power prices had a positive effect, whereas hedging of coal prices had a negative effect in the first quarter of 2009.

Operating Profit (EBITDA)

EBITDA amounted to DKK2,653 million compared with DKK3,186 million in the first quarter of 2008. A substantial part of the decrease was due to effects from timing differences in connection with the huge fluctuations in market prices for, in particular, oil, gas and coal, with the rising prices for a large part of 2008 resulting in large negative effects from time lag and application of the FIFO principle to coal inventories in the first quarter of 2009.

The DKK533 million falls can be broken down by business area as follows:

In Exploration & Production, EBITDA amounted to DKK1,212 million, on a par with the first quarter of 2008. Higher production was offset by lower oil and gas prices and higher operating expenses as a result of expansion of activities (additional producing wells)

In Generation, EBITDA declined by DKK328 million to DKK487 million, primarily reflecting a lower contribution margin from thermal power production as a result of application of the FIFO principle to coal inventories and lower peak surcharge, which, however, were partly offset by higher power generation

In Energy Markets, EBITDA was down by DKK112 million at DKK399 million as a result of negative time lag effect driven by falling oil prices, but benefited from forward gas sales at prices significantly exceeding the current market price level

In Sales & Distribution, EBITDA was up DKK22 million at DKK748 million, primarily reflecting increased earnings from gas distribution as a result of higher tariffs due to regulatory shortfall revenue in previous years, and colder weather than in the first quarter of 2008.

Depreciation, Amortization And Operating Profit (EBIT)

First-quarter 2009 EBIT was down DKK471 million at DKK1,702 million, with the decrease in EBITDA amounting to DKK533 million. Depreciation was down DKK62 million at DKK951 million, predominantly reflecting impairment losses in 2008 that reduced the basis of depreciation and amortization.


The sale of Frederiksberg Forsyning and Frederiksberg Forsynings Ejendomsselskab to the Municipality of Frederiksberg was completed in the first quarter of 2009, yielding a gain of DKK 31 million.

Cash Flows

First-quarter 2009 operating cash flows increased by DKK655 mil-lion to DKK3,488 million compared with DKK2,833 million in the same period in 2008.

Working capital changes and the item other adjustments generated a cash inflow compared with the first quarter of 2008, whereas EBITDA, tax payments and financial items (foreign exchange loss in the first quarter of 2009 compared with a gain in the first quarter of 2008) generated a cash outflow compared with the first quarter of 2008. The principal reason for the cash inflow from working capital changes in the first quarter of 2009 was a reduction in Energy Markets’ gas inventory throughout the winter season. Other adjustments made a more positive contribution than in the first quarter of 2008 and related primarily to reversal of market value adjustment of ineffective coal price hedging and time value of oil options that were recognized in EBITDA, but had no effect on cash flow. Investing activities absorbed DKK 3,091 million compared with DKK 2,114 million in the first quarter of 2008. The main investments in the first quarter of 2009 were:

Development of the offshore wind farms at Gunfleet Sands (DKK 466 million) and Horns Rev 2 (DKK 236 million)

Acquisition and construction of the gas-fired power station Severn in Wales (DKK 772 million after offsetting acquired cash and cash equivalents and debt)

Continued development of the Norwegian gas field Ormen Lange (DKK186 million) and the Danish field Nini Ost (DKK150 million).