Harbour Energy plc joined the dealmaking parade on Thursday, announcing a $11.2 billion “transformational acquisition” of the upstream assets of Germany’s largest natural gas and oil producer, Wintershall Dea AG.
Wintershall has gas and oil prospects in Algeria, Argentina, Denmark, Egypt, Germany, Libya, Mexico’s onshore and offshore, and in Norway. Also included in the deal would be carbon capture and storage (CCS) licenses in Europe, but Russian assets are not included.
The mega deal with Wintershall shareholders BASF and LetterOne “materially enhances production, reserve life and margins,” and “increases exposure to natural gas,” Harbour executives noted.
“The acquisition is expected to transform Harbour into one of the world’s largest and most geographically diverse independent oil and gas companies, adding material gas-weighted portfolios in Norway and Argentina and complementary growth projects in Mexico. Harbour will also benefit from an increased reserve life and improved margins with lower operating costs and greenhouse gas intensity.”
In the first six months of 2023, the companies’ combined revenue was $5.1 billion.
The latest deal adds to the steady stream of integrated oil and gas takeovers that began ramping up a few months ago.
Shifting ‘Toward Natural Gas’
"The addition of Wintershall Dea’s assets will increase our production to over 500,000 boe/d, extend our reserves life, and enhance our margins and cash flow, all supporting enhanced shareholder returns over the longer run,” Harbour CEO Linda Z. Cook said. “Importantly, the acquisition also advances our energy transition objectives by shifting our portfolio toward natural gas, lowering our GHG emissions intensity and expanding our CCS interests into new European markets.”
Wintershall is a major player in Argentina, where it develops natural gas for export. It has stakes in onshore fields in Neuquén province and offshore in Tierra del Fuego at the southern tip of South America.
In Mexico, both companies are active developers too.
Harbour now owns 12.39% of the Zama unit in Mexico’s portion of the Gulf of Mexico (GOM). The Zama unit on Block 7 is in the shallow water Sureste Basin. It also has a 30% stake in Block 30 to the southwest of Zama, where a two-well exploration campaign began in October 2022.
Wintershall, among other things, operates the onshore Ogarrio oilfield in Mexico with a 50% stake. In Mexico’s GOM, including the Sureste Basin, Wintershall has shares in 10 exploration blocks, three as operator.
Under terms of the merger, BASF, a 72.7% shareholder in Wintershall, would own 46.5% of Harbour once the merger is completed, with Harbour’s current shareholders owning 53.5%. LetterOne, a 27.3% shareholder in Wintershall, would own 251.5 million nonvoting shares. If LetterOne were to convert its holdings into ordinary shares, Harbour’s current shareholders would own 45.5% of the combined company, with BASF and LetterOne owning 39.6% and 14.9% respectively.
Once the merger is completed, Harbour would continue to be chaired by R. Blair Thomas, with Cook continuing as CEO and Alexander Krane as CFO.
The acquisition, expected to be completed by the end of 2024, is to be done as a reverse takeover, which Harbour said would allow it to retain its London listing.
