RWE to Sell Production Arm

Germany's second largest power producer RWE has today announced that it plans to withdraw from oil and gas exploration. As a result, the company plans to sell its exploration arm RWE Dea.

In a statement on its website, the company confirmed that it would be selling the RWE Dea in one transaction. Decreasing debt largely motivated the decision to sell the asset; the market continues to be trying for the company though it said in the same statement that it had a good financial year in 2012, with both EBITDA and operating results up 10% to €9.3 billion and €6.4 billion respectively.

"It would take considerable pressure off future capital expenditure and therefore make an essential contribution to improving RWE’s financial headroom." 

The company also said that the decision was in line with its overall "strategic repositioning", which will also see the company close its nuclear power plants by 2022 in line with government requirements. Germany announced that it would withdraw completely from the use of nuclear power following the Fukushima nuclear disaster in 2011. RWE has already seen its Biblis nuclear power plant closed as a result of the decision. 

RWE said today that it expects its operating results to decline "significantly" after 2013 in the face of the changing energy scene in Europe.

"We are a company that has to work hard for its future," CEO Peter Terium said, "and we will face the challenges created by the transformation of the German energy market."

The utility is now currently assessing how best to go about disposing of RWE Dea and says it will announce any transaction details "in due course."