Wintershall Dea says good time for shareholders' 2021 IPO plan

FRANKFURT: German oil and gas company Wintershall Dea, owned by BASF and Russia's LetterOne, said the market conditions were favourable for an initial public offering (IPO) planned for 2021, its chief executive told Reuters.

CEO Mario Mehren said in an interview he was encouraged by the level of market interest, although the decision lay with the two shareholders BASF and LetterOne and could also be subject to the course of the COVID-19 pandemic.

"As a company we're ready to go," Mehren said, with regard to the planned listing.

"We see indeed positive signals from raw materials prices, equity markets and the macro-economy, which are all strengthening," he said.

LetterOne declined to comment. A spokesman for BASF, which owns 67% of Wintershall Dea, confirmed it was targeting an IPO in 2021 if market conditions are right.

The pandemic hit Wintershall Dea's nine-month results, the company reported in November, but said sustainably lower operating costs and higher output should help in the long term.

Full-year numbers are due at the end of February.

Mehren said a 1.5 billion euros ($1.82 billion) bond issuance this week was more than two times oversubscribed, showing the market believed in its efforts to protect its balance sheet. Its delivery on pledges last year mean it will have net zero upstream activities by 2030.

Earnings before interest, tax, depreciation, amortisation, and exploration expenses, a standard oil industry measure, (EBITDAX), however, fell 44% in Jan-Sept 2020 when oil and gas prices plummeted.

Mehren said the company's 70% share of gas production placed it in a strong position, given that gas has a future as a bridging technology pending the mass arrival of renewable energies.

"We cannot do without gas," he said of the German and European energy mix.

Policymakers and the public have focused on the increase in renewables in electricity provision, forgetting that power accounts for only 20% of Germany's primary energy mix, he said, and that large amounts of oil and gas are still consumed in transport and heating.