RWE Sells Oil and Gas Unit to Group Led by Russia's Fridman
FRANKFURT/DUESSELDORF, Germany, March 16 (Reuters) – Germany's debt-burdened utility RWE has struck a deal to sell its oil and gas production arm DEA to a group of investors led by Russian tycoon Mikhail Fridman, valuing the unit at about 5.1 billion euros ($7.10 billion) including debt.
Under pressure from a deep and prolonged industry crisis, caused by a surge in rivals' renewable capacity as well as weak energy demand in its core market Europe, RWE has been looking for ways to reduce its debt pile of more than 30 billion euros, including cutting jobs and shedding assets.
The group, which earlier this month revealed its first net loss since 1949, had announced plans to sell DEA about a year ago, aiming to rid itself of large investments needed to keep the unit's exploration business afloat.
"This agreement is a major milestone in delivering our announced strategic realignment of the group," RWE's Chief Executive Peter Terium said in a statement. "In addition, it is a further and essential step towards improving our financial strength."
With operations in 14 countries, DEA employs about 1,400 staff and owns stakes in about 190 oil and gas licenses or concessions in Europe, the Middle East and North Africa, some of which are non-producing and in need of large investments.
It accounted for about nine percent of RWE's operating profit in 2013.
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