(WO) — Harbour Energy has agreed to acquire Wintershall Dea's upstream assets for $11.2 billion.

BASF, LetterOne, and Harbour Energy signed an agreement on Dec. 21 to transfer Wintershall Dea's exploration and production business, including its producing and development assets, exploration rights, and carbon capture and storage licenses in various countries, to Harbour Energy.

In exchange, at closing, the shareholders of Wintershall Dea – BASF (72.7%) and LetterOne (27.3%) – will receive total cash consideration of $2.15 billion and new shares issued by Harbour equating to a total shareholding in the enlarged Harbour of 54.5%.

The agreed enterprise value for the Wintershall Dea assets amounts to $11.2 billion. This amount includes the outstanding bonds of Wintershall Dea with a nominal value of around $4.9 billion that will be transferred to Harbour at closing.

With this transaction, BASF takes a major step towards achieving its announced strategic goal to exit the oil and gas business. After closing, the transaction creates optionality for monetization of BASF’s stake in the combined company, as Harbour is listed on the London Stock Exchange.

“In addition to the cash component, the shares in Harbour that BASF will receive upon completion of the transaction offer significant potential for value creation and allow for a gradual and optimized exit from the oil and gas business over the next few years,” Dr. Dirk Elvermann, CFO of BASF, said.

Wintershall Dea’s headquarters and the related staff are not part of the transaction. This will require further restructuring and ultimately the closure of the headquarters’ units in Kassel and Hamburg that currently have around 850 employees.

Harbour intends to take on some employees from the current headquarters into the combined company. Further specifics will be agreed after a more detailed review between signing and closing. Employee representatives will be involved in the process according to respective legal regulations and established practices.

In parallel to the transaction with Harbour, the legal separation of Wintershall Dea’s Russia-related business is progressing as planned. BASF and LetterOne will remain the owners of the company holding the Russia-related business, for which significant federal German investment guarantees are in place. The Russia-related business includes stakes in the joint ventures in Russia, the ownership interest in Wintershall AG in Libya (Wintershall Dea share: 51%), in Wintershall Noordzee BV in the Netherlands (Wintershall Dea share: 50%) as well as the share in Nord Stream AG (Wintershall Dea share: 15.5%).

Furthermore, Wintershall Dea is continuing its preparations for a separate sale of its stake in WIGA Transport Beteiligungs-GmbH & Co. KG (WIGA), which is not part of the transaction. WIGA is active in the German gas transport business; it is a joint venture of Wintershall Dea (50.02%) and SEFE Securing Energy for Europe GmbH (49.98%). WIGA’s operationally independent subsidiaries operate high-pressure pipeline networks, including GASCADE’s transport network, as well as OPAL and NEL.

Until closing, Wintershall Dea and Harbour will continue to operate as independent companies. There is no assurance that the agreed transaction will be completed. The transaction is, among other things, subject to the approvals of merger control and foreign investment authorities in several countries. Subject to these regulatory approvals, closing is targeted for the fourth quarter of 2024.

In the first half of 2023, the combined business had pro-forma revenue of $5.1 billion and EBITDAX of $3.7 billion. Overall, production volumes of Harbour and Wintershall Dea amounted to 513 thousand barrels of oil equivalent per day in the first half of 2023. In 2022, the combined business had pro-forma revenue of $13.5 billion and EBITDAX of $10.3 billion.

Overall, production volumes of Harbour and Wintershall Dea amounted to 526 thousand barrels of oil equivalent per day in 2022. Combined 2P reserves stood at 1.5 billion barrels of oil equivalent at the end of 2022.

BASF has appointed Morgan Stanley & Co. International plc as exclusive financial advisor as well as Freshfields Bruckhaus Deringer as legal advisor in connection with the transaction.