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WINTERSHALL NEWS: BASF and LetterOne sign letter of intent to merge Wintershall and DEA

BASF and LetterOne want to found one of the largest independent oil and gas companies in Europe. And are planning to issue an IPO in the medium term. Wintershall DEA: A traditional company by success.

 

BASF and LetterOne intend to merge their respective oil and gas producing subsidiaries: Wintershall and DEA (Deutsche Erdöl Aktiengesellschaft) will become one company. This would create one of the largest independent oil and gas producers in Europe. Together, Wintershall and DEA produce around 600,000 barrels of oil equivalent (boe) per day. The joint venture would be called Wintershall DEA. A corresponding letter of intent has now been signed. Closing could be expected in the second half of 2018, subject to customary regulatory approvals. There is no assurance that BASF and LetterOne will enter into definitive transaction agreements or that the intended transaction will be consummated.

Together, the two traditional German companies have 3,200 employees worldwide. The headquarters of the consolidated company shall remain in Kassel and Hamburg. BASF would therefore hold the majority of shares in the new Wintershall DEA company. As a further development step, BASF and LetterOne plan to issue an Initial Public Offering (IPO) for Wintershall DEA in the medium term.

With Wintershall DEA, Wintershall would continue its strong growth of recent years. Wintershall has increased its production in the past ten years by 50 percent from 111 million boe in 2006 to 165 million boe in 2016. In the same period, Wintershall has doubled its proven reserves (1P) to 1.6 billion boe.

Read the press release of BASF

Key figures Wintershall and DEA

With Wintershall and DEA two traditional companies would be merging together that are ideally suited to one another. Wintershall was initially founded in Kassel in 1894 to mine potash salts. DEA was founded in Nordhausen, Thuringia, in 1899 as the "Deutsche Tiefbohr-Actiengesellschaft" in order to produce mineral oil products. Both companies have evolved over the course of their more than 100-year histories and have strategically optimized their respective portfolios. Wintershall has been part of BASF in Ludwigshafen since 1969, when it immediately became BASF's largest European subsidiary. Since then Wintershall has been an important supplier of natural resources to BASF and a key component of its chemical feedstock strategy. DEA, which was a subsidiary of RWE from 1988 to 2015, now belongs to the Luxembourg holding company, LetterOne. Originally DEA also owned a network of petrol stations, refineries and logistics, which Royal Dutch Shell took over in 2002.

The companies' key figures:

For the full year 2016, net sales in the Oil & Gas segment of the BASF Group amounted to around 2.8 billion euros, the EBITDA amounted to around 1.6 billion euros and the EBIT to around 500 million euros. DEA's sales for the full year 2016 amounted to around 1.5 billion euros, the EBITDA was around 614 million euros and the EBIT around 44 million euros.

Wintershall produced 165 million barrels of oil equivalent (boe) in 2016; its proven reserves (1P) amounted to 1.6 billion boe at the end of 2016. DEA's annual production in 2016 amounted to 50 million boe; its proven reserves (1P) amounted to 483 million boe.

 

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