Germany’s Wintershall Dea has posted a boost in production for last year but has cut its capital expenditure budget for the year ahead as energy markets face growing supply and demand uncertainty.

The first year of Wintershall Dea following the merger saw the company produce 642,000 barrels of oil equivalent per day in 2019, which is 9% more gas and oil than Wintershall and Dea’s combined total in 2018 which stood at 589,000 boepd.

Revenues over the 12-month period reached €4.7 billion ($5.1 billion) compared to €5.6 billion for 2018. Earnings before interest, tax, depreciation and amortisation fell to €2.8 billion compared to €3.6 billion year-on-year.

The year saw Wintershall Dea post a loss of €673 million compared to a profit of €952 million in 2018.

Nevertheless, the early synergy effects of the merger resulted in savings of €100 million last year.

“The company’s production costs of $4.30 per barrel are almost half the industry average, and the company also has high-level reserves (2P) of 3.8 billion boe. At the current production level, that is equivalent to a reserve range of 17 years,” Wintershall Dea said.

“You can’t count on anything going according to plans this year during these uncertain times,” said chief executive Mario Mehren, as he announced the outlook for 2020.

“During the first and second months of this year, we have already seen significant levels of uncertainty with high levels of supply and then demand being hit with the coronavirus (Covid-19). This, coupled with the sharp drop in oil price triggered by the Saudi Arabia-Russia price war, brought on more uncertainty.

“We were hit too, but Wintershall Dea is well positioned in the face of crisis as our merger, and subsequent synergies, came just at the right time,” Mehren said.

For the year ahead, Mehren said production is expected to range between 600,000 and 620,000 boepd, not including Libya.

Wintershall Dea has also reduced its capital expenditure plans for 2020 to between €1.2 and €1.5 billion, a 20% cut on previous plans.

The exploration budged has been reduced to between €150 million and €200 million for the year ahead, compared to a budget of €340 million last year.

Last year, Wintershall Dea made its successful debut on the capital market with its inaugural bond placement, which was oversubscribed almost three times.

The initial public offering scheduled for this summer, however, “will naturally depend on market conditions”, Mehren said.

“We’ve said we will be IPO ready by mid-2020, and this still holds true. But…we will need the right market conditions,” he said.

Finance

Wintershall Dea boosts output, cuts capex amid coronavirus precautions