BASF-Wintershall Earnings, Volume Up

BASF, the German chemicals group that owns Wintershall, said its 1Q net income declined by €30mn year on year to €1.7bn ($2bn).

Pre-tax group income from operations (Ebit) at €2.5bn was up €55mn year on year, due mainly to a “significant improvement in earnings in the chemicals and Oil & Gas segments.”

BASF’s Oil & Gas division (predominantly Wintershall) made a 14% increase in sales to €945mn on the back of higher gas and oil prices – with Brent at $67/b this 1Q compared to $54/b in 1Q2017 - plus higher production volumes from Norway and stronger trading volumes. Ebit before special items more than doubled, rising by €195mn year on year, to reach €365mn in 1Q2018.

Gas prices on the European spot markets rose significantly compared with 1Q2017, it noted. Overall oil and gas production volume increased by 11% year on yea; no volume figure was provided in its report.

BASF-Wintershall has an upstream portfolio that includes Russia, Norway, Germany, the Middle East and North Africa, along with Argentina where this week it celebrated 40 years of operations.

BASF's report made no specific reference to its pending Wintershall deal. Five months ago BASF and Russian-owned LetterOne announced they had signed a letter of intent to merge their respective oil and gas subsidiaries Wintershall and DEA – to be initially 67%-owned by BASF and 33% by LetterOne; at the time they announced completion was expected in 2H2018.

BASF said there were no changes to the group’s outlook for full year 2018 earnings.

The group also announced, as at the end of its AGM, Martin Brudermuller will become its new chief executive, succeeding Kurt Bock who - after a two-year cooling off - becomes BASF's new chairman in 2020. Brudermuller has been BASF's chief technology officer since 2015.