Germany’s second largest utility RWE is to sell its oil and gas business in a bid to cut its debts.

The company revealed today that it hoped to raise around €4.6bn from the sale of its exploration and production arm RWE Dea, which would “take considerable pressure off future capital expenditure and therefore make an essential contribution to improving RWE’s financial headroom”. The company currently has debts of €33bn.

News of the planned disposal came as RWE unveiled its 2012 results, which were better than expected. The group’s earnings before interest, tax, depreciation and amortisation were €9.3bn and its operating result was €6.4bn, both 10 per cent up on the previous year.

RWE is still adjusting from the decision taken by the Merkel government in 2011 to withdraw from nuclear power, however its 2012 results were boosted by its profitable fleet of lignite plants, which helped to lift the group’s electricity generation by 10 per cent to 227.1 billion kilowatt hours.

In Germany, RWE’s operating result was up 10 per cent to €4.6bn and earnings from power generation increased 13 per cent to €3bn. In the Netherlands and Belgium, business decreased 7 per cent to €228m, while in the UK the operating result rose 34 per cent to €480m.

RWE’s renewables division, RWE Innogy, saw a slight improvement with an operating result of €183m, but the company cautioned that “the development of growth projects is still very cost-intensive. This is contrasted by the positive impact of the commissioning of new generation capacity.”

RWE chief executive Peter Terium today said: “We are a company that has to work hard for its future and we will face the challenges created by the transformation of the German energy market.”

He said the group’s target to become “more sustainable, more robust and more international” will remain but will have “to be pursued more slowly due to the limited financial headroom”.