BASF and LetterOne signed an agreement to merge their oil and gas businesses to create a joint venture called Wintershall DEA, BASF subsidiary Wintershall announced late Thursday. The deal should close in the first half of 2019, pending approval from authorities, according to a press release from the oil and gas producer based in Kassel, Germany.
"The joint venture will have a regionally more balanced footprint with growth opportunities in the core regions and strives for a daily production of 750,000 to 800,000 barrels of oil equivalent between 2021 and 2023," the statement said.
Through the merger, synergies of at least €200 million per year are expected as of the third year following the closing of the transaction.
Wintershall CEO Mario Mehren will be the board chairman and CEO of the joint venture.
Commenting on the merger, Greig Aitken, principal analyst at global natural resources consultancy Wood Mackenzie, said that the deal would form one of Europe's largest independent exploration and production companies.
"Both companies are internationally diverse, with strong European hubs, and both have material positions in Germany and Norway," he said, adding production from Wintershall DEA would rank below only the majors and Repsol in terms of European-headquartered producers. DEA Deutsche Erdoel AG is an international exploration and production company for oil and gas with headquarters in Hamburg, Germany.
According to the statement, the combined business of Wintershall and DEA had pro-forma sales of €4.7 billion in 2017. Total income from operations before depreciation and amortization (EBITDA) stood at €2.8 billion while their combined net income was €740 million.
(Anadolu Agency)
