Spain: Repsol Upstream Unit’s Income Rises 15.7 pct

Repsol posted net income of 1.901 billion euros in the first nine months of 2011, 6.4% higher than the 1.786 billion euros reported in the year-earlier period. The group’s operating income totalled 4.102 billion euros, 1% higher than that recorded in September 2010.

The company’s encouraging results are partly due to the improvement of crude oil and gas realization prices and the continued recovery of the chemicals business, as well as the excellent results achieved by the LNG unit.

Repsol’s Upstream oil and gas realization prices increased 16.8% and 29.6% respectively, offsetting the lower production of liquids due to temporary circumstances. In this respect, operations in Libya that had been halted since 5 March resumed in October with encouraging initial production levels.

Operating income for the Upstream business was 1.206 billion euros, 15.7% higher than in the first nine months of 2010.

The LNG division showed an especially positive performance based on higher sales after the start-up of Peru LNG, boosting operating income by 367.8%.

The Downstream unit’s operating income was 1.097 billion euros, a fall of 3.2% due to the drop in sales and international refining margins. Nevertheless, and on a more positive note for the unit’s profits, the Chemicals business has consolidated its recovery.

At the end of the quarter, operations began in the new units at the Cartagena refinery, and tests are set to begin in mid-November on the new unit of the Petronor refinery in Bilbao. These projects have been completed 200 million euros below initial planned investment, due to lower costs during the construction phase.

YPF’s operating income was 1.008 billion euros compared with 1.205 billion euros in the first nine months of 2010, due to prolonged strikes in Argentina during the second quarter of 2011, now resolved, and higher costs. Gas Natural Fenosa posted an operating income of 712 million euros, 4.9% less than the year-earlier period.

Repsol maintains a secure financial position thanks to sound management practices and continued financial discipline. The group’s net financial debt, excluding Gas Natural Fenosa, was 2.909 billion euros at the close of the third quarter, a net debt over capital employed ratio of 8.4%.

Upstream: Improved results and better realisation prices

The Upstream unit’s operating income to the end of September 2011 rose to 1.206 billion euros, 15.7% higher than the previous-year period. The increase is mainly due to higher crude oil and gas realization prices and lower exploration costs, which more than made up for lower production due to temporary circumstances.

Especially significant was the increase in Repsol’s gas realization price, which rose 29.6% compared to an 8.7% decline of the Henry Hub reference price in the same period. Repsol’s crude realization price rose 16.8%. Prices had a positive impact of 512 million euros on the Upstream unit’s income.

In the year through September, oil and gas production was 301,101 barrels of oil equivalent per day, 12.8% less than the previous-year period due to temporary circumstances including reduced production as a result of the halt of operations in Libya, maintenance work in Trinidad and Tobago and the moratorium imposed by the United States in the Gulf of Mexico. The lifting of the American moratorium and the resumption of activity in Libya will allow Repsol to return to normal production in the medium-term.

Investments made during the period in this area totalled 1.148 billion euros, 58.1% more than the first nine months of 2010. Investment in field development represents 48% of the total and was assigned mainly to the United States, Bolivia, Brazil, Trinidad and Tobago Venezuela, and Peru. Investments in exploration were mainly made in the United States and Brazil.

In the fourth quarter, the company’s exploration campaign had new successes in Brazil, on November 4 announcing an offshore gas discovery in the Malombe well, in the Brazilian post-salt of the Espíritu Santo basin.

[mappress]
Source: Repsol, November 10, 2011