By Natalia Drozdiak 

FRANKFURT-- RWE AG said on Friday it has agreed to sell its oil and gas unit Dea to LetterOne by early March for 5 billion euros ($5.81 billion), EUR100 million less than previously agreed, to reflect slumping oil prices.

The German utility said it would divest Dea at a discount to LetterOne, a group of Russian investors led by entrepreneur Mikhail Fridman, to reflect the fall in the oil price and the changed market environment, a company spokesman said.

RWE initially agreed to the sale in March last year when the price of oil was still at $110 a barrel. The price of oil has plummeted more than 50% since then, leading oil and gas majors such as BP PLC and Schlumberger Ltd to cut jobs on lower profits.

RWE had initially wanted to close the sale of its Hamburg-based unit by the end of 2014 but has faced setbacks in getting government consent from countries where Dea has significant operations.

The German government and the European Union signed off on the deal in August. But RWE has said U.K. authorities are hesitant to give their approval because they are concerned that potential sanctions on the Russian buyers could endanger the unit's operations in the North Sea.

In December, RWE's Chief Executive Peter Terium said "I think we will be able to offer a solution in which those worries are being taken care of." At the time, he also emphasized the U.K. can't stop the whole deal but only "the British part, which is just 20%."

In the rejigged transaction, RWE said LetterOne would now keep Dea's U.K. activities separate from the rest of the company's business for a number of years.

In the event that sanctions are imposed on the buyers, RWE said it would keep the option to repurchase Dea's U.K. business during the first year after the sale is completed. RWE has said Dea's U.K. business is worth about EUR1 billion.

The company's shares jumped 6.6% at EUR24.00 in early afternoon trading in Frankfurt following the news.

"We are on track!" said Mr. Terium.

The company said it still doesn't have the letter of comfort it needs from the U.K. government but hoped that the authorities will approve the deal with this new structure.

Dea has operations in 14 countries around the world. It mainly produces oil and gas in the North Sea, but also explores and develops new fields in North Africa, the Caspian and South America.

The Dea sale is part of RWE's efforts to cut its EUR31 billion debt-pile and would be booked in 2015. RWE backed its 2014 guidance of operating profit between EUR3.9 billon to EUR4.3 billion and recurrent after-tax profit between EUR1.2 billion and EUR1.4 billion.

Write to Natalia Drozdiak at natalia.drozdiak@wsj.com

Access Investor Kit for Schlumberger NV

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=AN8068571086

Access Investor Kit for RWE AG

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=DE0007037129

Access Investor Kit for RWE AG

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US74975E3036

Subscribe to WSJ: http://online.wsj.com?mod=djnwires