BASF and LetterOne have agreed to merge their oil and gas subsidiaries Wintershall and DEA, creating a joint venture the companies say would become one of Europe’s largest exploration and production firms.
Under the agreement, BASF would hold 67% of the shares in the venture, Wintershall DEA, and LetterOne would hold 33%. L1 Energy, the energy investment arm of LetterOne, and BASF will govern Wintershall DEA with joint headquarters in Hamburg and Kessel, Germany. L1 and BASF intend to list Wintershall DEA through an initial public offering.
Merging Wintershall and DEA would create a company “with the scale needed to generate sustainable growth long into the future,” said Lord Browne, executive chairman of L1 and chairman of DEA’s supervisory board, in a 7 December statement.
The exploration and production companies had combined production in 2016 of 215MMboe, or 590,000 boe/d. Based on the combined proven reserves (1P) of 2.1 billion boe at the end of 2016, the reserve to production ratio of the combined business would be around 10 years. In 2016, the combined companies had pro-forma sales of US$5 billion (€4.3 billion), EBITDA of $2.6 billion (€2.2 billion) and net income of $383 million (€326 million).
The companies will operate independently until the merger closes in the second half of 2018.