Harbour Energy, a UK-listed oil and gas producer, has agreed to buy Wintershall Dea’s non-Russian assets for $11.2 billion, creating one of the world’s largest independent producers with over 500,000 barrels of oil equivalent per day (boed).
The deal, announced on Thursday, will add Wintershall Dea’s upstream operations in Norway, Germany, Denmark, Argentina, Mexico, Egypt, Libya and Algeria, as well as its carbon capture and storage (CCS) licences in Europe, to Harbour’s portfolio.
Wintershall Dea’s Russian assets, which were recently ordered by President Putin to be transferred to new Russian companies, are excluded from the deal.
The deal is a share and cash transaction, with BASF and LetterOne, the shareholders of Wintershall Dea, receiving 46.5% and 13.5% of Harbour’s shares respectively, and $4.9 billion of existing Wintershall Dea bonds.
Harbour will also pay an additional $2.15 billion from Wintershall’s cashflow over the next four years.
The deal is expected to be completed in the second half of 2023, subject to regulatory approvals and shareholder votes.
The deal will transform Harbour’s scale and geographic diversification, adding material gas-weighted portfolios in Norway and Argentina and complementary growth projects in Mexico.
The deal will also increase Harbour’s reserve life and improve its margins, operating costs and greenhouse gas (GHG) intensity.
The deal will benefit from a significantly lower cost of financing, as Harbour will inherit Wintershall Dea’s investment grade credit ratings and low-interest bonds.
The deal is in line with Harbour’s stated M&A objectives and offers a transformational value-creating opportunity for its shareholders.
The deal follows a couple of recent mega-mergers in the U.S. oil and gas sector, such as Exxon Mobil’s $60 billion deal for Pioneer Natural Resources and Chevron’s $53 billion deal for Hess Corp.
The deal comes after the UK government imposed a windfall tax on the oil and gas sector following the spike in energy prices in 2022, which pushed Harbour into a loss in the first half of this year.
The deal is the latest in a series of acquisitions by Harbour, which was created in 2021 after a merger between Chrysaor and Premier Oil.
Harbour’s chief executive Linda Cook said: “This is a transformational acquisition for Harbour, creating a leading global independent oil and gas company with a diversified portfolio of high-quality, long-life assets. We are delighted to partner with BASF and LetterOne, who share our vision of delivering value for all stakeholders through operational excellence, financial discipline and responsible energy transition.”
Wintershall Dea’s chief executive Mario Mehren said: “This transaction is a great opportunity for Wintershall Dea and its employees, as it will enable us to focus on our core business in Russia, where we have a strong track record of successful partnerships and projects. We are proud of the value we have created with our non-Russian portfolio and we are confident that Harbour will be a good owner and operator of these assets.
