RWE Earnings Buoyed by Cheaper Gas
German energy group RWE said May 12 that 1Q 2016 operating earnings were €1.75bn, up 7% year-on-year, with pre-tax earnings (Ebitda) up 5% at €2.3bn. Net income was 59% lower at €879mn.
Trading/Gas Midstream operating results grew to €166mn – from just €7mn in 1Q 2015 – but RWE cautioned that revenues from this division are “subject to major fluctuation during the year.”
Lower wholesale electricity prices than in 2015 caused its 1Q conventional power generation earnings to slump by 20% to €354mn. However lower fuel purchase prices improved the market conditions for RWE’s gas-fired power plants, especially in the UK where it invested heavily in recent years to open the new giant 2-GW Pembroke and 1.65-GW Staythorpe gas-fired plants.
RWE finance chief Bernhard Gunther said a late April recommendation from Germany’s nuclear phase-out commission that utilities pay into a state-run nuclear waste storage fund were “logical in principle” but carried too high a risk premium for generators so “are not acceptable to us,” but that RWE was still looking for a consensus solution. RWE, E.ON (also critical at its May 11 results) and Vattenfall continue their Constitutional Court action against Germany’s 2011 decision to accelerate nuclear plant closures.
Gunther said RWE’s subsidiary for renewables, grids, storage and retail began commercial operations on April 1 – provisionally called RWE International – with an initial public offering in it planned for 4Q 2016, depending on market conditions.
Gunther will become its chief financial officer, with Peter Terium as its CEO; Terium running both companies until the IPO. The head of RWE Supply & Trading meanwhile, Markus Krebber, will become the CFO of RWE, with the CEO position going to Rolf Martin Schmitz.
RWE confirms its earnings outlook for the RWE Group’s business performance this year, as published in March, apart from net debt (end March 2016: €27.9bn) which it said would rise modestly because of provisions for pensions.
German upstream firm Wintershall said May 12 it has awarded a service contract for the 180mn boe Maria field offshore Norway to US giant Halliburton that also includes drilling services for other Wintershall exploration and development wells in Norway. Value was not disclosed. Six development wells on Maria are to be drilled in 1H 2017. Partners in Maria, mainly an oilfield but with some gas, are Wintershall 50%, Norwegian state Petoro 30% and the UK’s Centrica 20%. Gas will be exported via the Asgard Transport to Karsto. Production start-up is due 2018.
Mark Smedley