Page 10 - EurOil Week 25 2021

EurOil INVESTMENT EurOil

BASF puts Wintershall IPO on hold

GERMANY GERMAN chemicals group BASF has delayed Wintershall Dea, or 72.7% when preference
plans for an initial public offering (IPO) at its gas shares are included.
Oil and gas assets are supply arm Wintershall Dea, after concluding Oil and gas prices are now back at pre-pan-
currently undervalued, that the market is currently undervaluing oil demic levels, following a recovery in fuel
according to BASF. and gas. demand, but there are expectations that the
Wintershall DEA, formed through the market will tighten further in the coming years
merger of Wintershall and DEA in May 2019, on the back of economic growth. On the other
was due to undergo an IPO in the second hand, there is some uncertainty about long-term
half of 2021. While BASF said it remained demand as the world accelerates towards its net-
“fully committed” to divesting its share in the zero 2050 target.
company, market conditions are not right at Wintershall Dea sees itself as well placed to
present. navigate the energy transition, given that 70% of
“While oil and gas prices at the spot mar- its production is gas, which is expected to serve
ket as well as at the shorter end of the forward as a bridging fuel in some markets. The company
price curve have recovered considerably, this is positioned for growth this year thanks to the
improvement is not yet fully reflected in the for- launch of new joint projects with Gazprom in
ward-looking broker consensus assumptions,” Russia.
BASF explained. “In addition, market valuations Wintershall Dea resumed dividend payments
of oil and gas companies have for various rea- in April, after posting record output results and
sons not again reached the level the shareholders strong financial numbers for the first quarter. It
expect to kick off the IPO.” distributed €500mn ($596mn) to shareholders
BASF added that “due to its very robust per- in the three-month period and a further €100mn
formance, Wintershall Dea remains a strong in the second quarter. It had put payments on
cash contributor to its shareholders.” hold after the onset of the coronavirus (COVID-
BASF holds 67% of ordinary shares in 19) pandemic. ™
PERFORMANCE

European gas prices surge above

$360 per 1,000 cubic metres

EUROPE NATURAL gas prices on European spot markets The European gas market remains “very
have continued their upward ascent, surging to robust” and “undeniably bullish,” analysts at BCS
The high price is above $360 per 1,000 cubic metres, according to Global Markets wrote in a research note on June
particularly unusual at Gazprom. 16. “Prices are at winter-like levels, and indeed
this time of year. The spot price on the NCG gas hub in Ger- are challenging the highest prices seen in at least
many hit $363.8 per 1,000 cubic metres on June four years. Meanwhile, Asian gas prices continue
14, or more than $100 above the price in Feb- their own long winning streak, pulling LNG to
ruary, Gazprom told reporters on June 16. The that region and away from Europe.”
company also noted slow injection rates at Euro- These bullish conditions are good news for
pean gas storage facilities. Gazprom’s share price, which touched $7.71 per
Gas prices are typically higher in winter and share on June 14, from a low of $5.7 per share
lower in summer, giving companies an incentive in mid-April. The company said in May it was
to store more volumes during the hotter months targeting a near 12% growth in gas production
of the year. But this year is anything but typical, in 2021. It also aims to increase its EBITDA by
as prices have surged in recent months because 50% this year to $30bn, deputy chairman Famil
of tight supply and growing demand driven by Sadygov said at a press conference on June 16. ™
the post-coronavirus (COVID-19) economic
recovery.
According to Gas Infrastructure Europe
(GIE), only 13.6bn cubic metres of gas has been
placed into storage so far this injection season,
while 66 bcm of gas was withdrawn during
last winter. Gazprom warns this poses a risk to
energy security.

P10 www. NEWSBASE .com Week 25 24•June•2021