Wintershall Dea to slash jobs as quarterly profit plunges 86%
Among multiple blows, the energy group suffers outages in Norway, loss of its Russian business and impairments from UAE project
30 October 2023 - 17:02
byVera Eckert and Patricia Weiss
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Frankfurt — Wintershall Dea’s third-quarter net profit fell 86% year on year, it said on Monday, blaming lower oil and gas prices, unplanned maintenance outages in Norway, lost Russian business and impairments from a United Arab Emirates (UAE) project.
The company’s earnings showed that adjusted net income totalled €61m in the three months to September — 86% lower year on year — compared with €429m a year earlier.
Excluding the adjustment, it made a third-quarter loss of €535m, due to impairments on assets and restructuring provisions of €587m in total, it said.
Most of the impairments came from higher costs at the UAE Ghasha, in which the company has a 10% stake, CFO Paul Smith told reporters.
“Capital costs have gone up and that’s now reflected in our revised planning assumptions,” he said.
Abu Dhabi National Oil Company (Adnoc) this month awarded contracts worth $17bn at Ghasha, the world’s biggest field of sour gas, which contains high amounts of hydrogen sulphide. It aims to operate with net-zero CO2 emissions.
Elsewhere, the loss of Russian production and the ensuing restructuring of the majority BASF-owned group forced Wintershall Dea to make a €223m pretax provision in the three months.
It lost access to big Russian production assets following Vladimir Putin’s invasion of Ukraine in 2022, as well as a stake in the Nord Stream 1 gas pipeline and had to write off its €1bn financing in Nord Stream 2. Both pipelines are defunct.
Its Russian business had provided much of its income for decades and before the 2022 events contributed half its output.
Wintershall targets annual cost savings of €200m and is laying off 500 staff, which it announced in September after being cut off from its Russian earnings.
Overall daily production in the third quarter was 324,000 barrels of oil equivalent per day, down 1%, as unplanned maintenance disrupted output at the Norwegian Aasta Hansteen and Skarv fields.
But with non-Russian activities in Europe, Latin America and the Middle East and North Africa continuing, the company raised capital expenditure 11% to €243m, due to higher development activity.
CEO Mario Mehren said it was essential to invest in fossil fuels to support a secure and affordable energy transition.
He singled out Norway as “the most important source of gas to Europe for decades to come”.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Wintershall Dea to slash jobs as quarterly profit plunges 86%
Among multiple blows, the energy group suffers outages in Norway, loss of its Russian business and impairments from UAE project
Frankfurt — Wintershall Dea’s third-quarter net profit fell 86% year on year, it said on Monday, blaming lower oil and gas prices, unplanned maintenance outages in Norway, lost Russian business and impairments from a United Arab Emirates (UAE) project.
The company’s earnings showed that adjusted net income totalled €61m in the three months to September — 86% lower year on year — compared with €429m a year earlier.
Excluding the adjustment, it made a third-quarter loss of €535m, due to impairments on assets and restructuring provisions of €587m in total, it said.
Most of the impairments came from higher costs at the UAE Ghasha, in which the company has a 10% stake, CFO Paul Smith told reporters.
“Capital costs have gone up and that’s now reflected in our revised planning assumptions,” he said.
Abu Dhabi National Oil Company (Adnoc) this month awarded contracts worth $17bn at Ghasha, the world’s biggest field of sour gas, which contains high amounts of hydrogen sulphide. It aims to operate with net-zero CO2 emissions.
Elsewhere, the loss of Russian production and the ensuing restructuring of the majority BASF-owned group forced Wintershall Dea to make a €223m pretax provision in the three months.
It lost access to big Russian production assets following Vladimir Putin’s invasion of Ukraine in 2022, as well as a stake in the Nord Stream 1 gas pipeline and had to write off its €1bn financing in Nord Stream 2. Both pipelines are defunct.
Its Russian business had provided much of its income for decades and before the 2022 events contributed half its output.
Wintershall targets annual cost savings of €200m and is laying off 500 staff, which it announced in September after being cut off from its Russian earnings.
Overall daily production in the third quarter was 324,000 barrels of oil equivalent per day, down 1%, as unplanned maintenance disrupted output at the Norwegian Aasta Hansteen and Skarv fields.
But with non-Russian activities in Europe, Latin America and the Middle East and North Africa continuing, the company raised capital expenditure 11% to €243m, due to higher development activity.
CEO Mario Mehren said it was essential to invest in fossil fuels to support a secure and affordable energy transition.
He singled out Norway as “the most important source of gas to Europe for decades to come”.
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