Spain: Repsol Records Good Results in Upstream Sector

Repsol posted net income of 1.344 billion euros in the first half of 2011, slightly higher than the 1.338 billion euros of the year-earlier period. The group’s operating income totalled 2.722 billion euros compared with 3.004 billion euros in the same period of the previous year. 

The company’s performance in the first half of the year compensated for unfavourable circumstances, such as the partial halt in production in Argentina due to labour strikes, which have now been resolved, and the suspension of production in Libya. These factors were partially compensated by the improvement of international oil prices, the recovery Repsol’s chemicals business and excellent results from its LNG business.

Repsol’s oil and gas realization prices, which rose 16.3% and 22.2% respectively, partly made up for lower liquids production in the period.

Operating income for the Upstream Business was 806 million euros in the first half of the year, 10.3% higher than in the year-ago period, while LNG earnings grew spectacularly due to the start-up of Peru LNG and greater activity at Canaport. Despite the recovery of the chemicals business, operating income at the Dowstream unit fell 18.5% to 756 million euros due to refining margins and lower profit from the LPG business.

Gas Natural Fenosa posted operating income of 512 million euros, a decrease of 7.1% from last year due to a change in its consolidation perimeter. YPF’s operating income was 601 million euros compared with 831 million in the first six months of 2010 due to prolonged strikes during the period, now solved, and an inflationary effect on costs.

Adequate management and ongoing financial discipline allowed the company to achieve an excellent financial result, reducing the group’s debt, excluding Gas Natural Fenosa, to 1.999 billion euros on June 30, 2011. Including preferred shares, debt fell by 263 million euros in the semester.

During the first half of the year, the company has sold shares in YPF through a number of operations. Petersen Group also exercised in May an option to buy 10% of the Argentinean company. Following these deals, Repsol retains a 57.4%, Petersen Group holds 25.5% and free float stands at 17.1%. An additional purchase option for 1.6% exists which, if executed, would reduce Repsol’s stake to 55.8% a shareholding the company considers adequate.

UPSTREAM: Higher oil and gas realisation prices

Operating income for the Upstream Business was 806 million euros in the first half of 2011, an increase of 10.3% from the year-earlier period. The increase was mainly the result of higher crude oil and gas realisation prices which compensated for lower volume produced. Especially significant was the increase in Repsol’s gas realization price, which rose 22.2% compared to a 10.6% decline of the Henry Hub reference price in the same period. Repsol’s crude realization price rose 16.3%, with a positive effect of 325 million euros on the operating income of the Upstream division.

Production in the first half was 310,021 boe/d, a decline of 10.1% from the year-earlier period. The fall is explained by circumstantial factors such as the suspension of activity in Libya and lower output in Trinidad and Tobago due to maintenance and in the Gulf of Mexico as a consequence of the drilling moratorium, which has now been lifted. This has allowed activity to return to normal in the Shenzi field Investments in the Upstream unit totalled 790 million euros, a 115.3% increase from the first six months of the previous year. Field development accounted for 47% of total expenditure, mainly in the United States, Bolivia, Venezuela, Trinidad and Tobago, Brazil and Peru. Exploration investment was mainly focused on Brazil and the United States.

Repsol makes new Brazilian offshore discoveries

In June, Repsol Sinopec made a new discovery in Brazil’s offshore , in Gavea well. Repsol Sinopec with partners, Petrobras and Statoil, discovered high quality crude in two levels in the 1-REPF-11A-RJS exploratory well

This discovery adds to that carried out last January in ultra-deep waters in the Carioca Northeast well, located in block BM-S-9, 275 kilometres off the Sao Paulo coast.

Repsol acquires Exploration Blocks in Alaska’s prolific North Slope

Repsol signed last March 7 an exploration joint venture with 70 & 148 LLC (“70”) and GMT Exploration LLC (“GMT”) on the North Slope of Alaska. Repsol’s working interest in these blocks that cover an area of 2,000 square kilometers will be 70%.

The estimated minimum exposure of this investment for Repsol, including amounts to be paid to its partners and the cost of exploration to be carried out over several years, amounts to $768 million. The start of exploratory work is scheduled for next winter.

[mappress]
Source:Repsol , July 28, 2011;