Repsol net profit down in second quarter; plans sale of assets to boost production
Spain’s Repsol SA said on Thursday its second-quarter net profit (excluding the recently-nationalized Argentine unit YPF) declined 45% on the year, as higher production in Libya and elsewhere couldn't offset the effect of declining oil and gas prices on the value of inventories.
Its net profit without YPF SA fell year-on-year to 274 million Euros in the three months ended June 30. Including the discontinued YPF operations, net profit fell 58% to 244 million Euros.
Recurring replacement-cost-adjusted net profit, the figure most closely watched by analysts because it strips out volatile swings in the value of inventories, increased 27%, to 481 million Euros from 380 million Euros a year earlier, excluding YPF.
Repsol said production of oil and gas in the second quarter increased 8%, to 320,000 barrels of oil equivalent a day, bolstered by higher output in Bolivia and the restoration of production in Libya. Output there stopped during the country's civil war and is at pre-war levels again after restarting late last year.
The earnings come after Argentine President Cristina Fernandez in early May nationalized 51% of YPF, the country's leading oil and gas company that was formerly controlled by Repsol. The Spanish company eventually ended up with a 12% stake in YPF.
Repsol Chief Financial Officer Miguel Martinez said the loss of YPF had a net effect on the company's earnings of negative 38 million Euros. Since the nationalization, Repsol has cut its dividend payout ratio and committed to slashing its debt load in order to protect its investment-grade credit rating.
In that vein, Mr. Martinez said in a conference call with investors that more than 10 companies have already expressed interest in buying Repsol's liquefied natural gas assets.
The company has said it will sell assets in Canada, Peru and Trinidad and Tobago in a move to invest 19 billion Euros over the next four years to boost production.
We are putting everything on the table to guarantee the investment grade, even in the worst case scenario, he said.