BASF and LetterOne Energy have signed a letter of intent to merge their respective oil and gas subsidiaries Wintershall and DEA in a joint venture that could create one of the largest independent European E&P companies.
The new JV firm would operate under the name Wintershall DEA. BASF would determine the chief executive officer and LetterOne the deputy chief executive officer of the new company, which would be headquartered in Kassel and Hamburg, Germany.
Wintershall said in a statement that the new firm would have significant growth potential.
In the coming months, BASF and LetterOne will prepare and conduct a confirmatory due diligence and negotiate definitive transaction agreements. Closing could be expected in the second half of 2018, subject to customary regulatory approvals. Until the closing, Wintershall and DEA will continue to operate as independent companies.
In the medium term, BASF and LetterOne envisage to list Wintershall DEA through an initial public offering.
Based on the valuation of the E&P businesses, BASF would initially hold 67 per cent and LetterOne will hold 33 per cent in Wintershall DEA.
“Wintershall DEA will be one of Europe’s largest independent exploration and production companies, with the scale needed to generate sustainable growth long into the future. We look forward to creating jointly with BASF a new company, with activities in new places, new perspectives and new prospects for the future,” said Lord John Browne, the executive chairman of LetterOne Energy.
Overall, production volumes of Wintershall and DEA amounted to 215 million barrels of oil equivalent (BOE) in 2016, this equals a production of around 590,000 BOE per day.