Flat BASF Earnings Buoyed by Wintershall

German chemicals giant BASF’s net income was flat in second quarter, but it enjoyed a doubling of earnings from its oil and gas segment – the bulk of which is its Wintershall upstream business.

Group net income was 1% lower year on year to €1.48bn in 2Q2018, which also reported a small €0.5bn ($0.58bn) increase in 2Q sales to €16.8bn. CEO Martin Brudermuller also said it expects to conclude the acquisition of certain assets from German rival Bayer in August.

In BASF’s oil and gas segment, 2Q sales value rose considerably to reach nearly €1bn, with higher prices but also more Norwegian output following the start of new fields. Brent firmed to an average of $74/b in 2Q2018 – up from $50 in 2Q2017 – while gas prices on the European spot markets were also “significantly higher than in the prior-year quarter,” it said. Oil & gas earnings before interest, tax (Ebit) and before special items more than doubled, up 114% to €391mn in 2Q (€183mn in 2Q2017). The segment's net first half 2018 was 122% higher year on year at €783mn.

BASF’s statement did not refer to its ongoing plan to merge Wintershall with a rival E&P firm, nor did it talk of Wintershall’s financial backing for the controversial Gazprom-led Nord Stream 2 project.

BASF and Russian-owned LetterOne in December said they plan to merge their Wintershall and DEA subsidiaries – to be initially 67%-owned by BASF – and said completion was expected during 2H2018.