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UK-listed Harbour Energy has agreed an $11.2bn deal to buy Wintershall Dea’s oil and gas assets from Germany’s BASF and the investment firm LetterOne, backed by sanction-hit Russian oligarchs Mikhail Fridman and Petr Aven.
The blockbuster acquisition would transform Harbour Energy, which had a market value of just over $2bn before the deal was announced, from a UK-focused oil and gas producer into an international player with projects in at least nine countries.
The deal includes Wintershall’s oil and gasfields in Norway, Germany, Denmark, Argentina, Mexico, Egypt, Libya and Algeria, but not its former business in Russia. Harbour’s oil and gas production will rise from about 190,000 barrels a day to more than 500,000 b/d when the deal completes.
Harbour chief executive Linda Cook told the Financial Times that the transaction would “more than double” the size of the company, diversify the business geographically and significantly increase Harbour’s reserves.
“Given the size and quality of the Wintershall Dea portfolio being acquired, the transaction will transform Harbour into one of the world’s largest global independent oil and gas companies,” she said.
Shares in Harbour closed at 297.40p, up 21 per cent — their highest close since March — having risen as high as 317p in afternoon trading on Thursday.
Harbour, which is the largest oil and gas producer in the North Sea, will pay $2.15bn in cash and take on $4.9bn in debt in the form of existing Wintershall bonds.
In addition, it will issue approximately 921.2mn new Harbour shares to BASF and LetterOne at about a 60 per cent premium to its average stock price for a total value of $4.15bn, the company said.
BASF said the deal was a “major step” for its long-delayed plans to exit the oil and gas business.
This year the German chemical group refloated the idea of listing the oil and gas business — a plan that was blocked by LetterOne in January 2022, when the London-based firm valued the oil and gas producer at roughly $20bn.
Wintershall has since suffered heavily from the fallout of Russia’s war in Ukraine. As recently as two years ago, Wintershall made a fifth of its pre-tax profits in Russia.
Post transaction, BASF, which owned 73 per cent of Wintershall will own about 46 per cent of Harbour.
LetterOne, which owned 27 per cent of Wintershall, will be issued with a specific, new class of non-voting Harbour shares to ensure it has no governance role in the company.
LetterOne has not been sanctioned but Friedman and Aven, who own 49 per cent of the company, were targeted last year.
“It was important for us to ensure that we were protecting Harbour investors from any potential negative shadow or perception as a result of the transaction,” Cook said.
In addition, Harbour is not acquiring Wintershall assets in Russia or its interest in several joint ventures with Gazprom in other parts of the world.
In January, Wintershall announced that it had lost control of its Russian assets, with the Kremlin expropriating its Siberian gasfields that were jointly owned with Gazprom and €2bn in cash disappearing from a shared bank account.
Wintershall’s subsequent exit of Russia, which made it one of the last western oil and gas explorers to leave the country after its invasion of Ukraine, led to a €5.3bn writedown of its business as well as the deconsolidation of its Russian assets.
Harbour was a vocal critical of the UK’s windfall tax, formally known as the Energy Profits Levy.
The Wintershall deal will reduce Harbour’s dependence on the UK, which will represent less than 40 per cent of the group’s production down from almost 100 per cent today.
“Our aim has always been to establish a material base of production in at least one other region around the world . . . And so with this transaction we do that,” Cook said.
Additional reporting by Patricia Nilsson in Frankfurt
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