01 May 2019
BASF and LetterOne complete merger of Wintershall and DEA
Creation of the largest independent oil and gas company in Europe
On track to reach production target of 750,000 to 800,000 barrels of oil equivalent per day between 2021– 2023, equivalent to an annual production growth rate of 6-8%
Synergies of at least €200 million per year
- Initial Public Offering envisaged for 2nd half of 2020
London, United Kingdom – LetterOne and BASF today announced the completion of the merger of their oil and gas businesses to create Wintershall Dea, the largest independent exploration and production company in Europe.
All necessary regulatory approvals were received from nine countries, including Germany, Norway, the United Kingdom and Russia.
This merger, the largest in the oil and gas sector for a decade, creates a new oil and gas company - Wintershall Dea - which is the world’s largest privately-held energy company.
Headquartered in Kassel and Hamburg, Wintershall Dea has activity spanning 13 countries across Europe, Latin America, North Africa and the Middle East. The company will be managed by an Executive Board consisting of five members: Mario Mehren, Chairman and Chief Executive Officer (CEO); Maria Moraeus Hanssen, Deputy CEO and Chief Operating Officer (COO), responsible for Europe and MENA; Thilo Wieland, Member of the Executive Board responsible for Russia, Latin America and Midstream; Hugo Dijkgraaf, Chief Technology Officer (CTO) and Paul Smith, Chief Financial Officer (CFO).
LetterOne and BASF have also today announced that Hans-Ulrich Engel, Vice Chairman of the Board of Executive Directors of BASF SE, and Lord Browne of Madingley, Executive Chairman of L1 Energy, will be rotating non-executive Chairmen of Wintershall Dea’s Supervisory Board. The role will be held by Hans-Ulrich Engel for the first fifteen months. BASF and LetterOne will be supported by independent advisors Scott Nyquist, former senior partner and member of McKinsey’s Board of Directors, and Matti Lievonen, CEO of Oiltanking GmbH and former CEO of Neste Corporation.
In 2018, Wintershall and DEA together would have produced approximately 590,000 barrels of oil equivalent (BOE) per day. On a proven (1P) reserves basis, the combined company’s reserves stood at 2.4 billion BOE, giving a reserves to production ratio of 11 years. The combined business of Wintershall and DEA would have had sales in 2018 of €5.7 billion, income from operations before depreciation and amortization (EBITDA) of €3.6 billion and net income of €1.1 billion.
Based on its existing project pipeline, Wintershall Dea is on track to grow production to between 750,000 and 800,000 BOE per day between 2021 and 2023, which equates to an annual production growth rate of between 6 and 8 percent.
Commenting on the completion of the merger, Lord Browne said:
“Size is very important in this industry. Very rarely do you have the opportunity to create a company of this scale and quality. Wintershall Dea will hit the ground running, with a project pipeline that delivers market-leading growth in the years to come. L1 Energy looks forward to seeing Wintershall Dea generate sustainable value growth long into the future.”
Hans-Ulrich Engel said:
“With Wintershall Dea we create the leading independent European exploration and production company with international operations in core regions. By combining the two German-based entities, BASF and LetterOne lay the basis for strong profitable growth for Wintershall Dea.”
Teams have been preparing the integration of the two companies, including the development of Wintershall Dea’s operating model; the identification of synergies is progressing. The company expects to realise annual synergies of at least €200m as of the third year following the closing of the transaction.
Both shareholders are committed to the sustainable and profitable growth of Wintershall Dea. The company will target an investment grade credit rating. After closing, the joint venture will have no shareholder loans outstanding towards BASF or LetterOne.
BASF and LetterOne expect to offer shares in Wintershall Dea through an Initial Public Offering (IPO) in the second half of 2020, subject to market conditions.
L1 Energy is the energy investment arm of LetterOne. LetterOne was founded in 2013 and is an international investment business headquartered in Luxembourg. LetterOne’s strategy is to build a new portfolio of successful companies that are leaders in their fields and sectors. It makes long- term investments of its own capital in companies in which its sectoral experience and strategic and geographic expertise will improve performance and help companies grow. It has recruited world-class CEOs, sector investment teams and Advisory Boards to invest at scale. It buys and builds assets, which it can develop over time as platforms of long-term sustainable growth. It invests through L1 Energy, L1 Technology, L1 Health and L1 Retail.
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