Harbour Energy, listed in the UK, has signed a $11.2bn agreement to purchase Wintershall Dea’s oil and natural gas assets. The deal was backed by German investment firm LetterOne and Russian oligarchs Mikhail Fridman Petr Aven.
Harbour Energy had a value in the market of just under $2bn prior to the announcement. It would now be a global player with at least nine projects spread across countries.
Wintershall will sell its oil and gas fields in Norway, Germany and Denmark as well as in Argentina, Mexico and Egypt. However, the former Russian business is not included in this deal. Harbour’s oil-and-gas production will increase from about 190,000. barrels per day to over 500,000 b/d after the deal is completed.
Harbour’s chief executive Linda Cook stated that the deal would “more-than-double” the company’s size, increase its reserves and diversify it geographically.
She said that the Wintershall Dea acquisition will make Harbour one of the largest independent oil and natural gas companies in the world.
Harbour shares closed Thursday at 297.40p – up 21 percent – their highest close in March. They had risen to 317p during the afternoon trade on Thursday.
Harbour, the world’s largest oil and natural gas producer, will pay cash of $2.15bn and assume $4.9bn debt as existing Wintershall bonds.
The company also said that it would issue approximately 921.2mn Harbour shares at a premium of about 60 per cent to its average share price to BASF, and LetterOne, for a value totaling $4.15bn.
BASF described the deal as a “major move” in its long-delayed plan to exit the oil business.
The German chemical group has re-floated its idea to list the oil & gas business. This plan was initially blocked by LetterOne, a London-based company in January 2022 when it valued the oil & gas producer at approximately $20bn.
Wintershall is now suffering from the aftermath of Russia’s conflict in Ukraine. Wintershall’s pre-tax profit in Russia was a fifth as recently as two year ago.
After the transaction, BASF will now own approximately 46 percent of Harbour. BASF owned 73 percent of Wintershall.
LetterOne, who owned 27 percent of Wintershall will be issued a new, specific class of Harbour non-voting shares in order to ensure that it does not have a governance role within the company.
LetterOne was not sanctioned, but Friedman and Aven who owned 49 percent of the company were targeted last year.
Cook stated that it was crucial to protect Harbour investors against any negative perceptions or shadows as a result.
Harbour does not acquire Wintershall’s assets in Russia, nor its interest in several joint-ventures with Gazprom around the world.
Wintershall announced in January that it lost control over its Russian assets. The Kremlin had expropriated its Siberian Gasfields, which were jointly owned by Gazprom, and €2bn of cash disappeared from a joint bank account.
Wintershall’s exit from Russia, making it one of the few western oil and natural gas explorers who left the country following its invasion of Ukraine led to the write-down of €5.3bn of its business, as well as a deconsolidation its Russian assets.
Harbour has been a vocal critic of the UK windfall tax.
Wintershall will decrease Harbour’s reliance on the UK. The group will now produce less than 40% of its production, down from nearly 100% today.
“Our goal has always been to establish at least one material base of production around the globe. . . Cook added: “We do this with the transaction.”