Wintershall and DEA merge into Wintershall DEA – ‘largest independent oil and gas company in Europe’

Oil and gas companies DEA and Wintershall have completed the previously announced merger agreement, creating Wintershall Dea, a company deemed the largest independent exploration and production company in Europe.

In a joint statement on Wednesday, BASF (parent company of Wintershall) and LetterOne (parent company of DEA) said that Wintershall Dea would 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.

According to the statement on Wednesday, 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, the statement reads.

Size matters

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.”

The merged company expects to realize annual synergies of at least €200m as of the third year following the closing of the transaction. 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.

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