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    Wintershall Dea Earnings Plunge on Weaker Prices


The company says it is in a good position to weather the storm, thanks in part to its low-cost gas heavy portfolio.

by: Joseph Murphy

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Wintershall Dea Earnings Plunge on Weaker Prices

Core earnings at Wintershall Dea slumped 42% year on year (yr/yr) in the first quarter, dragged down by weaker oil and gas prices, the German producer reported on May 20.

Earnings before interest, taxes, depreciation, amortisation and exploration expenses (Ebitdax) came to €481mn ($527mn) in the three months ending March 31, down from €832mn a year earlier. Revenues were down 31% at €1.11bn, and Wintershall Dea posted an adjusted net loss of €78mn, versus a €320mn profit in the first quarter of 2019.

Wintershall Dea's averaged realised gas price fell 41% yr/yr to $1.61/'000 ft3Prices at the Netherlands-based TTF hub saw a sharper decline of 48%, but the company gained from diversified pricing constructs that provided a built-in dampening mechanism, it said. Its realised oil price dropped 22% to $31/b.

On the upside, the company's production was stable at 626,000 boe/d, with oil output falling to 172,000 boe/d from 174,000 boe/d and gas extraction rising to 454,000 boe/d from 452,000 boe/d.

"Looking at the first quarter 2020, the situation in the oil and gas markets has become even more challenging," CEO Mario Mehren said. "However, we are in a good position to weather the storm given our low-cost, gas heavy portfolio, stable cash flows from our midstream business and a healthy balance sheet."

Wintershall Dea has slashed planned capital expenditure this year by 30% to €1.0-1.2bn, with exploration spending slated to fall 20% to €150-250mn. It is also targeting a 10% cut in operating expenditure. Common dividends have been suspended, and the company managed to increase its liquidity to more than €2.4bn, thanks to €450mn in working capital lines.