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
In September 2018, L1 Energy and BASF signed an agreement to merge their oil and gas businesses and create Wintershall DEA.
Wintershall DEA will be the largest independent European exploration and production company, with activity in 12 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. Production is expected to rise to around 800,000 barrels of oil equivalent per day in the early 2020s as the company executes its business plan.
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.
“Wintershall DEA is the largest E&P merger in Europe for over a decade, and will have a diverse portfolio of outstanding growth prospects, with the scale needed to access important new opportunities.”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
DEA is an international exploration and production company for oil and gas.