German utility RWE to sell oil and gas unit to Mikhail Fridman’s L1 Energy for $7.10 bn
18 Mar 2014
German utility RWE AG has struck a deal to sell its oil and gas exploration and production unit RWE Dea AG, to a consortium led by Russian tycoon Mikhail Fridman, in a €5.1 billion ($7.10 billion) deal including debt.
The Essen-based company yesterday said that it would sell the unit to L1 Energy, an energy investment vehicle backed by Mikhail Fridman for around €4.5 billion and L1 Energy will also take on around €600 million of RWE's liabilities, taking the total deal value to €5.1 billion.
Flush with funds through the sale of Anglo-Russian oil venture TNK-BP for $55 billion, Mikhail Fridman had set up L1 Energy in order to invest around $20 billion into energy assets over the next three to five years.
L1 Energy outbid rival offers, including a €3.5 billion bid from Germany's BASF unit Wintershall AG, as well as from Hungarian oil and gas group MOL MOLB.BU.
Burdened with debt of around €30 billion, RWE, Germany's second-largest utility by market value, had in March 2013 announced that it would sell RWE Dea in order to strengthen its bottom line and ease pressure on future capital expenditure. (See: German power producer RWE AG to sell hydrocarbon business)
RWE Dea currently has stakes in more than 180 licences or concessions in oil and gas blocks in 14 countries and is the operator of almost half of them.
The company has production facilities and concessions in Germany, the UK, Norway, Denmark and Egypt. Its production facilities in Algeria and Libya are currently under construction.
It also has exploration permits in Algeria, Ireland, Libya, Mauritania, Poland, Trinidad & Tobago and Turkmenistan and also operates large underground gas-storage facilities in Germany.
As of 31 December 2011, RWE Dea had proven resources of approximately 237 million cubic meters of oil equivalents and generated around 84,000 barrels of oil equivalent a day.
The Hamburg-based company generated operating profit of €521 million in 2013 on revenue of around €1.8 billion.
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