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Wintershall and DEA to merge

BASF and LetterOne have signed a definitive transaction agreement to merge their respective oil and gas businesses in a joint venture, which will operate under the name Wintershall DEA. The deal will form one of Europe's largest independent E&P companies, with production from Wintershall DEA ranking below only the majors and Repsol in terms of European-headquartered producers, according to market analyst Wood Mackenzie.

Greig Aitken, Principal Analyst M&A, at Wood Mackenzie, notes: ‘Both companies are internationally diverse, with strong European hubs, and both have material positions in Germany and Norway. The bulk of Wintershall's value lies in Russia, and it has a material position in Argentina, including exposure to the Vaca Muerta unconventional play. DEA has a second core in Egyptian gas, and is establishing a position in Mexico.’

Closing of the transaction is expected in 1H2019, subject to approvals of merger control and foreign investment authorities as well as mining authorities and the German Federal Network Agency. Until closing, Wintershall and DEA will continue to operate as independent companies.

In 2017, the combined business of Wintershall and DEA had pro-forma sales of €4.7bn, income from operations before depreciation and amortisation (EBITDA) of €2.8bn and net income of €740mn. In 2017, pro-forma hydrocarbon production of Wintershall and DEA totalled 210mn boe, equivalent to production of around 575,000 boe/d. The joint venture will have a regionally more balanced footprint with growth opportunities in its core regions and plans to produce some 750,000 to 800,000 boe/d between 2021 and 2023. The merger is expected to see synergies of at least €200mn/y as of the third year following the closing of the transaction.

News Item details


Journal title: Petroleum Review

Keywords: Energy

Countries: Europe -

Subjects: Oil and gas, Exploration and production, Business management

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