The North Sea assets of German utility RWE have been sold to a pair of eastern European oil billionaires in a £4.26 billion deal.
The agreement, which is subject to approvals, is the first major eventure for Luxembourg based investment vehicle LetterOne Group since it was established last year.
The fund was set up by billionaire’s Mikhail Fridman and German Khan as a means of investing some of the fortune they acquired when selling their stake in BP’s former Russian venture last year.
Mr Fridman’s personal wealth was put at approximately £10.6bn in the 2013 World’s Richest People list published by Forbes, while Mr Khan was said to be worth £6.8bn.
RWE Dea is operator of the Breagh field in the southern North Sea, one of the largest natural gas fields currently in development with a daily flow rate of around 118m cubic feet.
The firm also has a 50% stake in the Clipper South field and is operator for the Cavendish, Windermere and Topaz gas fields. The firm also has an 11.3% stake in BP-operated Devenick.
RWE DEA – which employs around 1375 staff – yesterday said further details of the deal would be disclosed “shortly” but confirmed the total enterprise value included around £500 million of “assumed liabilities.”
Earlier this month, the RWE group reported a loss of £2.3bn, its first in more than 60 years, and warned of a further substantial decrease in earnings in 2014.
RWE AG chief executive officer Peter Terium said the DEA sale would help to improve the firm’s balance sheet.
“This agreement is a major milestone in delivering our announced strategic realignment of the group,” Mr Terium said.
“In addition, it is a further and essential step towards improving our financial strength.”
Mr Terium said he welcomed the new group’s plans for the DEA assets, adding “LetterOne Group’s intention to make RWE Dea the principal conduit of the group’s investments in the oil and gas industry supports RWE Dea as a solid, German-based, oil and gas operator with even stronger international growth ambitions.”
The deal – which is subject to approval by RWE AG’s supervisory board and also to various authorities in multiple countries – is expected to complete by the end of this year.