UK-based Harbour Energy has agreed to acquire almost all the upstream assets of European gas and oil company Wintershall Dea in a cash and stock deal worth $11.2bn with the latter’s shareholders BASF and LetterOne.

The deal excludes Wintershall Dea’s activities related to Russia.

Currently, BASF, which is a German chemicals company holds a 72.7% stake in Wintershall Dea. The remaining 27.3% is held by LetterOne, which is an investment firm of Russian billionaire Mikhail Fridman.

The agreement encompasses the transfer of Wintershall Dea’s producing and development assets, as well as exploration rights in various countries to Harbour Energy. These include exploration and production (E&P) assets across Norway, Argentina, Germany, Mexico, Algeria, Libya (excluding Wintershall), Egypt, and Denmark (excluding Ravn), along with carbon capture and storage (CCS) licenses.

However, Wintershall Dea’s headquarters and its associated personnel are not part of the transaction. As a result, there will be further restructuring, leading to the eventual closure of the headquarters’ units in Kassel and Hamburg in Germany, which currently employ approximately 850 individuals.

The acquisition will contribute 1.1 billion barrels of oil equivalent (boe) in proven and probable (2P) reserves at approximately $10 per boe and over 300,000boe per day (boepd) in production at around $35,000 per boepd to Harbour Energy.

Following the acquisition, the enlarged Harbour Energy will have a production level exceeding 500,000boepd and hold proven and probable (2P) reserves totalling 1.5 billion boe.

It is expected to help Harbour Energy become one of the world’s largest and most geographically diversified independent oil and gas companies. It will involve substantial gas-focused portfolios in Norway and Argentina, coupled with complementary growth initiatives in Mexico.

Additionally, Harbour Energy will gain extended reserve life, enhanced margins, and reduced operating costs and greenhouse gas (GHG) intensity through the deal.

Harbour Energy CEO Linda Cook said: “Today’s announcement marks Harbour’s fourth major acquisition and the most transformational step yet in our journey to build a uniquely positioned, large-scale, geographically diverse independent oil and gas company.

“The addition of Wintershall Dea’s assets will increase our production to over 500 kboepd, extend our reserves life, and enhance our margins and cash flow, all supporting enhanced shareholder returns over the longer run.”

Upon completion of the deal BASF and LetterOne will be paid $2.15bn in cash and newly issued shares by Harbour Energy, resulting in a combined ownership stake of 54.5% in the enlarged oil and gas firm.

The purchase price includes Wintershall Dea’s outstanding bonds valued at approximately $4.9bn, which will be assumed by Harbour Energy at the closing of the transaction.

Through the transaction, BASF makes significant progress in realising its goal of exiting from the oil and gas sector.

The acquisition is contingent upon various factors, including regulatory, antitrust, and foreign direct investment approvals, in addition to securing approval from Harbour Energy’s shareholders. Anticipated completion of the acquisition is slated for Q4 2024.

For Harbour Energy, Barclays and J.P. Morgan Cazenove served as joint financial advisers for the transaction. On the other hand, BASF selected Morgan Stanley & Co. International as the sole financial adviser and engaged Freshfields Bruckhaus Deringer as legal counsel.