"With an operating result of 494 million euros, RWE Dea recorded the second-highest result in its corporate history in fiscal 2008, making a high value contribution to the RWE Group", declared the Chairman of the Board of Management, Dr. Georg Schöning, at the company's annual press conference in Hamburg today. "RWE Dea has been highly successful in its search for oil and gas; as a result, contingent resources increased considerably," Schöning continued. The company is maintaining its steady course towards further growth and is determined to proceed with its planned investments in spite of recent turmoil in the market environment. Schöning: "On the basis of the existing natural gas and oil discoveries, we are advancing steadily towards our strategic target, namely to double production by 2013."
In 2008, we succeeded in continuing the upward trend in our business," explained Chief Financial Officer Lutz-Michael Liebau. Operating result reached € 494 mn, slightly up on the previous year's high level of figure of € 492 mn. Income before taxes amounted to € 533 mn (previous year: € 553 mn), and income after taxes for 2008 came to € 280 mn (previous year: € 288 mn). Return on capital (ROCE) was 27 per cent (previous year: 28 per cent). Expressed in absolute figures, the value contribution of RWE Dea to the RWE Group came to € 277 mn (previous year: € 266 mn).
Marked increase in sales revenues on stable production data
Result influenced by increased prices and expenditure
The positive result is primarily due to the fact that production almost matched the previous year's level, the high average price of crude for the year as a whole, and the high price of natural gas. The annual average price for a barrel of Brent crude was U$ 97, approximately one third more than in the previous year. After rising quickly to peaks of up to U$ 146, the price started to plummet in autumn and dropped as low as U$ 37 by the end of the year. The price of natural gas, which tracks the price of crude with a certain time lag, was at a favourable level averaging 24.8 euro cents. A negative impact on revenues resulted from the marked increase in expenditure to achieve growth in future. Stepping up exploration activities means a rise in expenditure impacting on profit.
Positive development of reserves and resources
The total of reserves and contingent resources (discovered) grew by about 8 per cent in 2008, from 192 million cubic metres in the previous year to 208 million cubic metres of oil equivalents (OE). More than two-thirds of this is accounted for by natural gas. "The marked increase in contingent resources (discovered) of 21 per cent is largely due to discoveries in Egypt and Libya, and to successful exploration activities in Norway and Poland. It is a direct outcome of the expansion of our drilling program, which resulted in very favourable hit rate," said Rappuhn.
Further expansion in exploration and production
In fiscal 2008, RWE Dea's operations were further strengthened by extending exploration and production activities. In Germany, exploration measures continued at a high level of intensity. "We have a sound infrastructure in place here, which allows new discoveries to be developed quickly and cost-effectively," explained Thomas Rappuhn, Chief Operations Officer. For this reason, 3-D seismic campaigns were carried out in Northern Germany in an effort to find oil deposits in areas surrounding depleted oil fields, and in the search for potential natural gas storage sites in Southern Germany.
"In our core region of North Africa, the high potential for growth has been confirmed," said Rappuhn. The series of successful wells drilled in the offshore and onshore regions of the Nile delta in Egypt continued in 2008. Rappuhn stressed that: "We are planning to bring the extensive resources in Egypt into production quickly. The same applies to Libya, where RWE Dea continued its successful drilling campaign with seven oil strikes – one of them also showing additional gas reserves." Three wells sunk in Algeria also struck natural gas.
In the United Kingdom, RWE Dea acquired initial access to three partial blocks in 2008. Moreover, a confirmation well in the Topaz field struck gas and is set for development. In early 2008, RWE Dea was awarded six new exploration licences in Norway, with stakes ranging from 8 to 30 per cent. In addition, RWE Dea recorded two encouraging oil finds there, in the northern North Sea and in the Norwegian Sea. Production of liquefied natural gas (LNG) from the Snoehvit field increased significantly in 2008. In Poland, RWE Dea also made a successful oil find, the commercial viability of which still needs to be confirmed, however.
Licence portfolio significantly expanded in promising regions
RWE Dea is also well prepared for the future: "To ensure our continued success in the future through stepped-up exploration activities, we increased our portfolio of concessions by almost half compared with last year," said Thomas Rappuhn, Chief Operations Officer. The portfolio was supplemented by concessions in Ireland, Libya, Mauritania, Morocco, Norway and the UK. RWE Dea now has concessions over a total area of around 200,000 square kilometres – an area more than half the size of Germany.
Further increase in investments
RWE Dea again expanded the level of investments in 2008. At 606 million euros, capital spending exceeded the previous year's level of 505 million euros by 20 per cent. CFO Lutz-Michael Liebau: "The increase is the result of higher investments in all business areas that reflect the growth of RWE Dea." In particular, field development projects in Germany, Norway, Denmark, the UK and Egypt had a major effect. In the exploration area, investments went primarily into successful strikes in North Africa.
Significant increase in size of workforce
The implementation of RWE Dea's ambitious growth strategy calls for an increasing number of highly qualified, committed personnel. By stepping up recruitment, targeted internationalisation and systematic personnel development measures, the company is laying the foundations to secure a positive performance in the future. In 2008, RWE Dea succeeded in recruiting 130 new employees by offering them attractive career prospects within the company. This means a significant increase in the size of the workforce for the fifth year in succession. In 2008 the number of employees increased by five per cent, from 1,091 to 1,144 employee equivalents. "We are confident that in the current financial year, we will be able to attract more qualified applicants prepared to accept new professional challenges," said Schöning.
Striving for steady growth
The company RWE Dea, now looking back on 110 years of corporate history, will continue to pursue its strategy for growth in a targeted manner. RWE Dea has always adapted successfully to periods of volatility in the market in the past. As a consequence of the global economic crisis, this industry sector is currently feeling the impact of falling energy prices, and RWE Dea must be prepared for a marked deterioration in its earnings position for the current financial year. However, its business policy is designed to ensure success in the medium and long term, and to cause the production volume to double by the year 2013. Schöning: "We're determined to achieve our growth targets despite the difficult economic situation, and we will therefore proceed with our planned investments."
Most Popular Articles
From the Career Center
Jobs that may interest you