As Germany’s largest producer of crude oil and natural gas, Wintershall focuses on selected core regions where the company has a high level of regional and technological expertise. These regions are Europe, North Africa, South America as well as Russia and the Caspian Sea region. These operations are complemented by the company’s growing activities in the Arabian Gulf.

Production has grown considerably since 2000. Following the substantial rises in production in recent years, in 2009 the production of crude oil and natural gas rose again by 4 percent to 1361 million barrels of oil equivalent, a 70 percent increase on the figure for the year 2000 of 80 million barrels of oil equivalent. Wintershall now aims to raise production of crude oil and natural gas to 140 million barrels of oil equivalent by the end of 2010.

Although crude oil and condensate production² decreased by 12 percent in 2009 to 6.8 million tons compared to 2008 (2008: 7.7), natural gas production increased by 18 percent in 2009 to 13.6 (2008: 11.6) billion cubic meters. The decrease in oil production was attributed to the production limits imposed by OPEC in Libya, and the natural decline in production from older fields. The increase in natural gas production was due to the field Yuzhno Russkoye reaching plateau production sooner than planned. The total reserve-to-production ratio, which is based on Wintershall’s share of production in 2009 and refers to the reserves at year end, is about 10 years.

Investments in exploration and development of new fields

In 2009 Wintershall’s Exploration and Production segment invested a total of 740 million euros (2008: 1,465)³ in exploration, capital expenditure and acquisitions in the search for and development of new oil and gas deposits. Of this figure, 409 million euros (2008:1,208) were invested in Europe, 167 million euros (2008:164) in North Africa including the Middle East, 49 million euros (2008:52) in South America and 115 (2008:41) million euros in the core region Russia and the Caspian Sea. The key areas of investment were the field development projects in Germany (Mittelplate, Leer), the Netherlands (E18-A, P9-AB), Norway (Yme, Delta) and Argentina (Aguada Pichana).

17 wells identify new deposits

Overall, 29 exploration and appraisal wells (2008:16) were completed in 2009 during the course of exploration activities for crude oil and natural gas deposits. Wintershall identified new deposits in 17 of them (2008:5); four in Norway, six in the southern North Sea (the Netherlands, the UK, Denmark) as well as two in Argentina, three in Germany and two in North Africa. Wintershall plans to step up its search for new deposits in its core regions in 2010 and to forge ahead with the development of its known deposits, especially in the North Sea and Norway, in the next few years.

Wintershall widened its focus to include the so-called greenfield sector, i.e., areas where the existence of oil and gas has been established, but no development activities have yet been carried out, in addition to its exploration activities near known deposits, the so-called nearfield sector, which generally brings higher rates of success. But Wintershall is also pursuing its exploration activities in frontier regions, i.e., regions that have not been investigated yet, with new vigour.

In addition to our investments in finding, developing, and producing hydro-carbons, expanding our technological know-how secures the future success of our company. Wintershall conducts its own research and development projects in selected technological fields. These activities focus on reducing the risks involved in exploration methods, attaining a higher yield from deposits that are already producing, and developing technologies for deposits in which the development and production conditions are difficult. But overall, technological development focuses on harnessing the synergies with the research expertise of the BASF Group. In so doing, Wintershall can strengthen its position as a partner with excellent technological know-how in the race for access to crude oil and natural gas reserves.

Germany

Wintershall continued to invest in crude oil production in Germany last year. In March Wintershall’s crude oil production site in Emlichheim in Lower Saxony near the German-Dutch border was acclaimed for its innovative methods by the Initiative “Germany – Land of Ideas”. The BASF subsidiary uses steam-flooding technology in Emlichheim in order to produce the very viscous oil there. Wintershall has been producing crude oil there at a constant level for more than 60 years. To improve the development of existing deposits, in 2008 four new wells were sunk and are already producing oil. Wintershall also successfully drilled the well “Schwabmünchen 5” at the Aitingen site in Bavaria in 2008. The additional reserves in the eastern subfield at Schwabmünchen are now being connected to the oil production operations in Aitingen.

The “tight gas” field development in Leer, Lower Saxony, which started in 2007, was continued in 2009. Tight gas reservoirs typically contain gas that is embedded in highly compact, almost impermeable rock. With so-called multiplefrac technology, high pressure is applied to the rock of the deposit to fracture it in several places, making it easier for the gas to enter the borehole. Wintershall is developing the field in Leer in cooperation with GDF Suez E&P Deutschland GmbH (operator).

In May Wintershall and GDF Suez signed an agreement on the exchange of interests in exploration licenses in the German North Sea. GDF Suez will receive 40 percent of the offshore H&L blocks 80 kilometers north-northwest of the East Frisian island of Borkum. In exchange Wintershall will receive 25 percent of the Cuxhaven concession, which adjoins the Schleswig-Holstein crude oil field Mittelplate. The Mittelplate offshore field, in which Wintershall and RWE Dea AG each hold a 50 percent share, is the cornerstone of Wintershall’s oil production in Germany. With proven initial reserves of over 200 million barrels, the Mittelplate oil field is Germany's largest known oil deposit. The development of this field was continued in recent years with extended reach drilling from land.

In addition to our production sites in North Germany, Rhineland-Palatinate and Bavaria, we are focusing on expanding our exploration and production of crude oil and natural gas in the North Sea. The Wintershall platform A6-A in the far north-west of the German North Sea – the so-called “En-tenschnabel” (‘Duck’s Bill’) – is the only offshore gas production platform in Germany.

Europe

Around half of the natural gas currently consumed in Europe still comes from the countries bordering the North Sea – Norway, the Netherlands, Denmark, the UK and Germany. Wintershall has been active in the North Sea since 1965.

In 2009 Wintershall stepped up its activities in Norway considerably. Following the acquisition of Revus Energy ASA in December 2008, Wintershall Norge ASA is now one of the largest license holders in Norway with around 50 licenses; in more than 20 of them it is the operator. In July 2009 Wintershall already discovered significant deposits off the coast of Norway with its first operated exploration well “Grosbeak”. As of January 2010 Wintershall in Norway increased its interest in the Grosbeak license and now holds a 45 percent share. In addition, the wildcat well 34/4-11 Beta, 15 kilometers north-west of the Snorre field in license PL375, was able to identify oil in the northern North Sea. Additional wild cat wells drilled in 2009 in the Luno field, in which Wintershall has a 30 percent share, confirmed the existence of oil.

The integration of Revus was implemented successfully with the opening of the headquarters of Wintershall Norge in Stavanger. The move to Stavanger represents another step towards the implementation of the strategy to significantly increase the company’s crude oil and natural gas production in Norway and to become one of the most important operators on the Norwegian continental shelf. Norway plays a central role in our “Gas for Europe” strategy. With its large oil and gas reserves, and its existing links to western European markets, alongside Russia Norway is Europe’s most important supplier.

The Wintershall subsidiary was awarded shares in four new exploration licenses in the 2009 licensing round, three of these as operator. Two of these licenses lie in the Norwegian sector of the North Sea, one in the Norwegian Sea and one in the Barents Sea.

Wintershall’s activities in the UK were also increased. In 2008 Wintershall drilled an exploration well in part block 44/24b (Dimple) where the company has the majority shareholding of 49.5 percent. The discovery, known as “Wingate”, is set to enter the development phase from 2010 and contribute to production as early as 2011. Overall, Wintershall has interests in 30 blocks and part blocks in the British sector of the North Sea.

In Denmark the Ravn-3 appraisal well in the western part of the Danish North Sea confirmed the presence of oil. The well, which was drilled with a jackup rig at a depth of 48 meters, reached its total vertical depth at 4,469 meters below sea level in layers of the Triassic age and proved the existence of hydrocarbon-bearing sandstone from the Upper Jurassic age.

Wintershall is one of the largest producers of natural gas in the Netherlands. The southern North Sea is one of Wintershall’s traditional core regions. The BASF subsidiary operates at total of 26 offshore platforms in the southern sector of the North Sea, one of which, the A6-A, is in German territorial waters.

Platform E18-A started production in the Dutch sector of the North Sea much earlier than planned. The natural gas produced by the platform is sent through a pipeline five and a half kilometers long to Wintershall’s biggest platform, the F16-A, where it is then processed ready to be transported. In addition to the appraisal well Q1-28, a wildcat well in block L6-7 in the Dutch North Sea also struck gas in 2009.

Rijswijk, near The Hague, is home to the company-wide competence center for offshore technology. Here Wintershall is working on developing its shallow-water expertise, amongst other things. The development of off-shore expertise is generally gaining importance in the exploration and production of oil and gas, and the company applies this expertise to its activities in other regions of the world.

In order to further improve its efficiency as operator in the southern section of the North Sea, Wintershall controls 19 of its 26 offshore platforms from Den Helder with a state-of-the-art radio surveillance system. This Centre for Remote Controlled Operations (RCO) is a key requirement for the commercial production of smaller and medium-sized reserves in the southern section of the North Sea.

Russia and the Caspian Sea region

The joint field development projects with Gazprom in West Siberia were continued successfully in 2009 and made a key contribution to Wintershall’s success. The two projects, Yuzhno Russkoye and Achimgaz, help to secure Europe’s supply of natural gas. The gas will also be delivered to Europe via the planned Nord Stream Baltic Sea pipeline, which will provide a direct link between the Siberian gas reserves and Germany.

The Yuzhno Russkoye field in western Siberia reached plateau production of 25 billion cubic meters(RSC) a year much sooner than planned in the middle of last year. Wintershall has a 35 percent share in the field’s commercial success via Severneftegazprom. All 142 production wells are in operation. Roughly 70 million cubic meters of natural gas are produced every day. The field, which was discovered in 1969, has recoverable reserves of more than 600 billion cubic meters of natural gas. Gazprom currently supplies Germany with about 40 billion cubic meters of natural gas a year. Based on this figure, the Yuzhno Russkoye field alone could secure a further 15 years of Russian gas exports to Germany. The Cenoman formation, the reservoir from which the gas is being produced, lies about one kilometre underground. The natural gas from the formation has a very high percentage purity and consists of 98 percent methane.

The second joint project, the development of a subsection of the deeplying Achimov horizon in the Urengoy field, is operating very successfully: all six pilot wells were brought on stream successfully in the technically difficult deposit of the Achimgaz joint venture, in which Wintershall has a 50 percent share. Just one year after commissioning, the German-Russian joint venture was able to produce its first billion cubic meters(RSC) of natural gas. The Achimov formation is situated at a depth of 3,150 to 3,800 meters. Because of its complex geological structure, it is more difficult to develop than the more elevated layers, from which natural gas and condensate have been produced for over 30 years. The annual natural gas production volume alone is expected to be up to 7.5 billion cubic meters during the subsequent plateau phase.

Wintershall shares another German-Russian joint venture, Wolgodeminoil, with the major Russian producer of crude oil, OAO Lukoil. The joint venture operates in three licence areas in the Volgograd region covering a total surface area of about 13,600 square kilometres. It is carrying out extensive investigations there to locate new deposits. In the Caspian Sea Region Wintershall is pursuing exploration and development projects in Turkmenistan and Azerbaijan via its office in Ashgabat.

South America

Wintershall has been active in Argentinia since 1978, especially in the production of natural gas. Wintershall Energía S.A., a wholly owned subsidiary of Kassel-based Wintershall, has working interests in 15 oil and gas fields and is one of the largest natural producers in the country with an annual production of about 25 million barrels of oil equivalent.

Wintershall has focused its attention here on searching for new deposits, whereby it is also concentrating its efforts on crude oil. Consequently, investments in exploration in Argentina have risen significantly. The company explores both in regions that have not yet been developed geologically, such as the Cañadón Asfalto Basin, and in regions where hydrocarbons are already being produced, such as the Neuquén Basin. Here the company explores for new resources primarily in deeperlying rock strata in the foothills of the Andes.

The Aguada Pichana lies in the center of the Neuquén Basin. Over 230 wells, 174 of which produce gas, have been drilled in this field since it was discovered in 1972. Wintershall is currently forging ahead with the tight gas development of the Aguada Pichana Central-West field with horizontal production wells and is carrying out seismic measurements in the Las Carceles area. The so-called nearfield exploration was successful, resulting in the Aguada Pichana NW-x-1 (west of the Aguada Pichana north field). In February 2009 the consortium partners Wintershall Energía, Pan American Energy, Repsol YPF and operator Total signed an agreement with the Neuquen provincial government extending the license for the Aguada Pichana and San Roque concession by 10 years until 2027. This is direct confirmation of Wintershall’s intention to invest in Argentina long term. The exploration well La Caverna-x-1 in the neighboring Bandurria Block identified crude oil and natural gas deposits.

Off the coast of Tierra del Fuego Wintershall produces natural gas from the Carina and Aries natural gas fields, so far the largest natural gas production project offshore Argentina, together with the French company TOTAL and PanAmerican Energy (PAE). The consortium aims to produce a total of around 56 billion cubic meters of natural gas, 3.4 million tons of condensate and 2.4 million tons of LPG (Liquefied Petroleum Gas) from the two natural gas fields by 2027. The subsidiary Wintershall Energía has a 37.5 percent working interest in this project.In addition, Wintershall is also participating in the Cruz del Sur pipeline project, which delivers Argentinean gas from Buenos Aires to Montevideo in Uruguay.

Since March 2010 Wintershall has also held a 25 percent share in the 6,000-square-kilometer Otway block and a 25 percent share in the Tranquilo Block in the Magellan basin in Chile. Tranquilo and Otway cover an area of 12,000 square kilometers in total and are situated near our existing production operations at Tierra del Fuego. The company plans to carry out 2D and 3D seismic surveys here as well as three wells in the Tranquilo Bblock in the next few years.

North Africa

Wintershall has been engaged in exploration and production in Libya, one of the largest oil producers in Africa, since 1958. Since then more than 2 billion US dollars have been invested in Libya and more than 150 wells drilled overall. Wintershall currently operates eight onshore oil fields in the concessions 96 and 97. Gazprom has a 49 percent working interest in these projects via a German Wintershall company. Wintershall also produces from the Al Jurf offshore field in the Mediterranean Sea off the Libyan coast as part of a consortium with the Libyan National Oil Corporation (NOC) and French oil producer TOTAL.

The extension of existing onshore fields continued last year and the development of new oil discoveries began. For example, the first well B44-96 of the phase VI project in the As Sarah field started operations. The project includes several infill wells to increase production in concession C96. In order to enhance recovery in the oil fields in concession C97, a 142-km-long pipeline network through the Libyan Desert was completed, and now connects concessions C96 and C97. The pipeline network is not for transporting oil, but for sending water to the fields where it is used for water injection. A total of 22 wells will be sunk for this purpose, half of which will be used for water injection and half of which are for extracting the oil displaced by the water.

Wintershall is one of only a few companies in Libya to stop flaring the associated gas from crude oil production. Instead the gas is fully processed, which makes a significant contribution to reducing CO2 emissions. Wintershall has set itself the goal of discontinuing the flaring of associated gas at all crude oil production sites by 2012.

We have continued our exploration activities in the onshore exploration area covering 11,500 square kilometres in the Kufra basin in southeast Libya, where Wintershall is operator with a 65 percent stake. Following the success of the initial investigations by air and the first 2D seismic measurements, the first exploration well is scheduled for 2010.

Preliminary geophysical analyses have been conducted in the Taoudeni Blocks TA05 and TA06 in Mauritania on the border between Mali and Algeria. Following the geological evaluation of the blocks, the first seismic surveys will take place in 2010.

Middle East

In addition to its activities in North Africa, Wintershall expanded its operations in the Arabian Peninsula in 2009: in Qatar the BASF subsidiary is now the operator of three exploration blocks. With around 26 trillion cubic meters of natural gas, Qatar has the third-largest natural gas reserves in the world after Russia and Iran. Furthermore, Wintershall is opening its own representation in Abu Dhabi in order to strengthen its existing relations with governments, the NOC and partners, and to position itself in the region.

In 2008 Wintershall was awarded a 100 percent stake and will be the operator in Block 4N in the territorial waters of Qatar. This block is located close to the so-called North Field, the largest natural gas field in the world, and covers an area of 544 square kilometres in water depths of around 70 meters. In addition to the appraisal of existing seismic data, Wintershall carried out its own 2D/3D seismic measurements in the third quarter of 2009. Following evaluation of the seismic data, the first exploration well in the so-called Khuff formation of Block 4N is now being prepared for 2010. Wintershall plans to conduct a further appraisal program depending on the results.

In 2007 Wintershall won the license and operatorship for offshore Block 3, which covers a area of around 1,666 square kilometers. Once the initial depth analyses in the shallow waters have been completed, 3-D seismic analyses in Block 3 are planned in 2010 and two exploration wells in 2011/2012.