Completing a landmark merger
Energy’s ambition is to build a, safe, sustainably growing energy, group, which is recognised as a partner of choice in its industry. We took decisive steps in 2018 towards realising this ambition.
Europe’s largest independent oil and gas company
On May 1st 2019 L1 Energy and BASF completed the merger of their oil and gas businesses to create Wintershall DEA, the largest independent exploration and production company in Europe. 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 combined business would have had pro forma production of approximately 590,000 barrels of oil equivalent per day in 2018, almost 70% of which comes from natural gas. 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.
In 2018, the combined business would have generated revenue of €5.7bn and earnings before interest, taxes, depreciation, and amortisation (EBITDA) of €3.6bn. Based on the combined proven (1P) reserves of almost 2.4bn barrels of oil equivalent at the end of 2018, the reserves to production ratio of the combined business would be approximately 11 years.
The combined portfolio and scale of Wintershall DEA will provide significant potential for sustainable, long-term growth. LetterOne and BASF expect to be able to realise synergies equivalent to at least €200m per annum. In the medium term, the shareholders intend to offer shares in the company to the public through an initial public offering.
“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 hits 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.”Lord Browne of MadingleyExecutive Chairman of L1 Energy
DEA’s strong operational and financial performance
In 2018, DEA’s daily production averaged 121 kboe/day, representing a slight decrease from 2017 levels. However, as a result of higher commodity prices and cost savings, 2018 EBITDAX amounted to $1,219m, almost 20% higher than in 2017.
In December, DEA acquired Sierra Oil & Gas in Mexico. This acquisition is a key step towards a stronger portfolio and a concrete move that shows our strategic commitment to Mexico. As a result of the acquisition, DEA will acquire shares in a number of highly promising exploration and appraisal blocks, including a 40% share in the world-class Zama discovery, one of the largest shallowwater discoveries in the world in recent years.
In Norway, major milestones were reached in DEA’s operated Dvalin development with offshore operations, installation of the subsea template on the field, and installation of the first utility module on the Heidrun platform.
In Germany, DEA celebrated having produced 60 billion cubic metres of natural gas in the Voelkersen gas field since the early nineties. In Egypt, the company began Phase II of the Disouq field development, which involves connecting additional wells to the production facilities.
Extensive investments have also been made in the West Nile Delta development to bring the Taurus Libra and Giza Fayoum fields into production. The final field in the West Nile Delta concession, Raven, is expected to come online towards the end of 2019.
As of 31 December 2018, DEA had 2P reserves of 692m barrels of oil equivalent, on a par with the 2017 level.
L1 Energy portfolio
Wintershall Dea searches and produces natural gas and crude oil worldwide.