Galp profit falls

Portugal’s energy company Galp Energia today reported its second quarter 2014 EBITDA of €271 m, down 11% YoY due to weak international refining environment and Sines refinery maintenance. The company’s net profit also experienced a plunge.

In the exploration and appraisal activities segment, Galp highlighted the start of drilling of the appraisal well Apollonia in block BM-S-24, in Brazil’s Santos basin. In Mozambique, works continued with the developments in Rovuma basin, namely in Area 4, with the conclusion of drilling of exploration well Dugongo-1 and the start of drilling of the Coral-4 well. In Morocco, the drill of TAO-1 well started on 26 June, being the first offshore well to be drilled by Galp Energia as a project operator.

Within the development activities, namely in Lula/Iracema field in Brazil, Galp said that the development was proceeding as planned, with the second and third permanent producer wells connected to FPSO Cidade de Paraty (FPSO #2) through the Buoyancy Supported Risers (BSR) South.

During the second quarter of 2014, the natural gas from FPSO #2 started to be exported through the Lula-Mexilhão gas pipeline. Galp Energia and its partners anticipate that FPSO #2 will reach full production capacity in the fourth quarter of the year, as initially expected. In Iara field, at the Iara West-2 area started the first extended well test (EWT) with an average production of 29 kbopd.

Ebitda in the second quarter of 2014 amounted to €271 m, down 11% year on year (yoy) with the increase of net entitlement production in the Exploration & Production (E&P) business segment and growing LNG supply & trading activity of Gas & Power (G&P) business segment, not offsetting the decrease of results from the Refining & Marketing (R&M) business segment, following lower refining margins in the international market. Net profit in the second quarter of 2014 declined €18 m (20.9%) yoy to €68 m.

Capital expenditure in the quarter amounted to €266 m, c.80% of which was allocated to exploration and production activities, namely to the development of the Lula/Iracema field, in Brazil.

Additionally, and as a subsequent event to the end of the quarter, Galp Energia has reached an agreement with REN for the partial transfer of the concession of the regulated underground natural gas storage activity for an amount of c.€72 million. This transaction is subject to approval by the relevant authorities for the energy sector and by the antitrust entity.

The company said that the 3Q14 WI production expected at c.30 kboepd, supported by Lula NE production ramp-up and Iara EWT. Volumes of crude processed are expected to increase Quarter on Quarter, following the end of planned maintenance at Sines refinery.