Wintershall Hits Record Output, Eyes More Growth
Germany’s biggest producer Wintershall reported March 21 a rise in oil and gas output last year, with a record 171mn barrels of oil equivalent (boe), or an average 500,000 boe/d, up from 164mn boe in 2017. Net income after taxes rose 9% to €829mn ($945mn), up from last year’s €760mn.
Earnings before interest, tax (Ebit) and special items were up 155%, from €683mn to €1.73bn, owing to higher oil and gas prices – European hubs were up 32% on 2017 – and more production in Russia and Norway, it said. Ebit was up €798mn to €1.733bn.
Wintershall also increased its reserves by 12% to a record 1.9bn boe, replacing 214% of its 2018 production and giving it another 11 years’ output at last year's rate.
This year will beat that, when the merger with DEA completes by the end of the second quarter, making Wintershall DEA the biggest independent European gas and oil company. The two now produce a total 590,000 boe/d but the target is to grow this to 800,000 boe/d in four years. CEO Mario Mehren said he was “convinced that it is right and important that Germany also has a powerful gas and oil company – in the same way that many of our neighbouring countries also have a major player." Their present owners, BASF and LetterOne, are planning an initial public offering (IPO) for Wintershall DEA in the medium term.
DEA has recently become active in Mexico, closing its takeover of Sierra March 19; and Wintershall has succeeded in entering a new oil and gas concession in Abu Dhabi.
Wintershall will have a 50% of Gazprom’s block 1A in the Achimov formation of the west Siberian Urengoi field, once the deal completes by the end of 2019. The project will produce around 8bn m³/yr and the development of blocks 4 A and 5 A (25%) is proceeding according to plan. Plateau production from Achimov is estimated at 15.5bn m³/yr.
Wintershall also has a 35% in the commercial success of the Yuzhno Russkoye natural gas field in western Siberia, which has been producing 25bn m³ since 2009. It was one of the fields aimed at filling Nord Stream 1. The development of the Turonian layer is expected to maintain the high production level to at least 2022, according to estimates from Severneftegazprom.
Wintershall DEA will be the third largest producer on the Norwegian Continental Shelf, with over 200,000 boe/d in the next few years, said Mehren. Wintershall is investing around €2bn from 2017 to 2020 in exploration and development there. Norway accounts for more than a third of Wintershall's global exploration budget.
Wintershall's investment in the Aasta Hansteen field and the related Polarled line, in a new part of the Norwegian shelf, which came on stream in December 2018, will “make a significant contribution to Norway's annual natural gas production in the coming years and thus to supplying significant energy volumes to Europe – from one of the cleanest producing countries in the world," said Mehren. Wintershall is also operator of two licences among others in won this year in core areas.
Wintershall is also operator of four of seven licences it won in Brazil, off the north and southeast coast, “considered one of the most highly promising oil regions in the world. It is part of our growth course that we are also active in new regions, and Brazil offers great potential," said Mehren.
Wintershall intends to further expand its technology base in Argentina and last year it drilled two horizontal wells in its operated Aguada Federal block to further explore the shale rock in the formation. It took over a further operatorship in 2018 with the CN-V block in Mendoza Province.
In November Wintershall took a decisive step in expanding its operations in the Middle East with the acquisition of a 10% stake in the Ghasha concession, alongside the Abu Dhabi National Oil Company (Adnoc). The Ghasha concession covers the development of the Hail, Ghasha, Dalma and other ultra-sour gas and condensate fields in Al Dhafra region offshore. Wintershall has experience of sour gas production in Germany.
Adnoc plans to produce more than 40mn ft³/day by the middle of the next decade, enough to supply around 2mn households with energy and help Adnoc's goals of a permanently reliable and economical gas supply and, ultimately, gas self-sufficiency in the United Arab Emirates, its gas now imported from Qatar. The Ghasha project will also produce oil.