RWE, Germany’s second-biggest utility, has put its oil and gas exploration unit up for sale in a move that could raise close to EUR 5B as a part of its drive to cut debt. RWE had previously said it only wanted to sell parts of the DEA unit that accounted for 23% of the group’s operating profit in 2012. DEA’s 2011 production was 5.1 million cubic metres in oil equivalents. It is active in Egypt, Norway, Libya and Britain, among others.
“We are not talking about a small asset. DEA is a big company”, said Chief Executive Peter Terium in its annual news conference, adding that selling the unit in one go was now the preferred option. He said RWE expected several interested parties for the auction, which could fetch several billion euros and was aimed at cutting group spending as well as its EUR 33 billion debt.
Analysts in the past put a price tag of about EUR 4.6B on DEA, and said big European energy groups like Total, GDF Suez, ENI and Repsol were likely to be interested in assets in Egypt, Libya and Algeria as they expand upstream operations following the Arab Spring uprisings.
German utilities RWE, E.ON and EnBW have all embarked on asset sale programmes as a part of their recovery from the country’s decision to exit nuclear energy by 2022, a move prompted by the nuclear disaster at Japan’s Fukushima plant. RWE initially planned to sell assets worth up to EUR 7B by the end of this year, but the group scrapped that target, saying it would not put itself under pressure in a difficult environment for utility assets.
