BASF to merge oil and gas unit with Russian billionaire Mikhail Fridman’s DEA Deutsche Erdoel
08 Dec 2017
German Chemical giant BASF yesterday said that it has agreed to merge its oil and gas unit, Wintershall, with DEA Deutsche Erdoel AG, the energy group spun off by RWE in 2014 and now owned by Russian billionaire Mikhail Fridman.
DEA, a unit of Mikhail Fridman's Luxembourg-based investment fund LetterOne was acquired by Fridman in 2015 for €5.1 billion.
The merged entity will be called Wintershall DEA. It will initially be 67-per cent owned by BASF and 33 per cent by L1 Energy, with plans to list the company through an initial public offering ''in the medium term.''
Wintershall DEA will be jointly headquartered in Kassel and Hamburg. The chief executive will be chosen by BASF and the deputy by LetterOne.
In 2016, the combined business had pro-forma sales of €4.3 billion, EBITDA of €2.2 billion and net income of €326 million.
''Wintershall DEA will be one of Europe's largest independent exploration and production companies, with the scale needed to generate sustainable growth long into the future,'' said Lord John Browne, executive chairman of LetterOne Energy.
''Wintershall DEA, will be a German and European energy champion which can compete with those in France, Italy, and Spain. Very rarely do you have the opportunity to create a company of this type,'' he added.
BASF's oil and gas activities are bundled in the Wintershall Group. Wintershall focuses on exploration and production in oil and gas-rich regions in Europe, North Africa, Russia, South America and the Middle East.
Together with Gazprom, the company is also active in the transport of natural gas in Europe.
Wintershall had annual sales of around €2.8 billion last year, EBITDA of around €1.6 billion and EBIT around €500 million.
For the full year 2016, DEA had net sales of around €1.5 billion, EBITDA of €614 million and EBIT €44 million.
The new entity will produce around 590,000 barrels per day from fields mainly in the North Sea, Africa and Russia and have combined proven reserves of 2.1 billion barrels of oil equivalent.