Britain's Harbour Energy HBR.L on Thursday agreed to acquire Wintershall Dea's non-Russian oil and gas assets in a $11.2 billion share and cash deal with BASF and LetterOne that creates one of the world's largest independent producers.
London-listed Harbour, the largest British North Sea oil and gas producer, has sought to expand beyond the United Kingdom after the government imposed a windfall tax on the sector following the spike in energy prices in 2022, pushing Harbour into a loss in the first half of this year.
Harbour shares closed 23% higher. BASF shares were up 0.2%.
The deal is the latest in a number of large oil and gas acquisitions in recent months including Exxon Mobil's $60 billion deal for Pioneer Natural Resources and Chevron's $53 billion deal for Hess Corp in October.
It is the fourth major acquisition Harbour, and its predecessor Chrysaor, has done since 2017.
Harbour will continue to want to grow over time, CEO Linda Cook told Reuters.
"Scale is increasingly important in our sector. Not only for relevance with investors, but also to ensure access to diverse low-cost sources of capital," Cook said.
The assets being acquired include Wintershall Dea's upstream assets in Norway, Germany, Denmark, Argentina, Mexico, Egypt, Libya and Algeria, as well as the company's carbon capture and storage licences in Europe.
Its Russian assets are excluded, Harbour said. Earlier this week, President Vladimir Putin ordered Wintershall Dea's stakes in Russian ventures be transferred to new Russian companies.
Its valuation based on Wintershall Dea's oil and gas reserves is virtually identical to Italian energy firm Eni's $4.9 billion acquisition of private equity-backed Neptune Energy in June, Jefferies analyst Mark Wilson said.
BASF, a majority shareholder in Wintershall Dea, will own 46.5% of Harbour and will be entitled to nominate two non-executive directors to Harbour's board as part of the deal.
LetterOne, the investment firm owned by Russian billionaire Mikhail Fridman who is under western sanctions, will own 14.9% of non‐voting, non‐listed convertible ordinary shares.
BASF will gradually exit the oil and gas business over time, BASF chief financial office Dirk Elvermann said in a statement.
Harbour will take on $4.9 billion of existing euro denominated Wintershall Dea bonds and will pay an additional $2.15 billion from Wintershall's cashflow, Harbour said.
The combined group will have production of over 500,000 barrels of oil equivalent per day (boed), mainly from Norway and Argentina. Harbour expects to produce around 190,000 barrels of oil equivalent per day (boed) in 2023.
(Reuters - Reporting by Yadarisa Shabong, additional reporting by Vera Eckert; Editing by Pooja Desai and Mark Potter, Kirsten Donovan)