Repsol Q3 net profit falls as financial costs weigh

MADRID (Reuters) - Repsol (REP.MC), Spain's largest oil group, said on Thursday third-quarter net profit fell 14.5 percent as higher financial costs compounded a fall in oil and gas production and a lower profit in the downstream division.

Repsol's net profit adjusted for one-time items and inventory costs (CCS adjusted net) came in at 429 million euros, broadly in line with an average estimate of 420 million in a Reuters poll of eight analysts.

Repsol's oil and gas production fell 18.2 percent due to lost oil output from the civil war in Libya, where Repsol has recently restarted activity, and maintenance work at its liquefied natural gas business in Trinidad and Tobago.

Repsol, which recently announced a major oil find in Argentina, reiterated its forecast for average production of 300,000 barrels of oil equivalent per day in 2011.

The group's downstream business saw profits fall as refining margins tightened quarter-on-quarter and sales of petroleum products declined due to sluggish economic growth in Spain and elsewhere.

Repsol's financial costs increased by nearly 100 million euros due to dollar appreciation against the euro and a 900 million euro increase in the group's debt to 2.91 billion euros, excluding debt from its Gas Natural Fenosa (GAS.MC) affiliate.

Operating profit rose 5.7 percent in the quarter and beat forecasts as a better-than-expected performance at the group's Argentine YPF (YPFD.BA) and liquefied natural gas (LNG) businesses offset weak production and downstream figures.

The LNG division posted further strong quarter-on-quarter growth with increases in volumes and margins as gas prices have recovered.

"Results were ahead of consensus ... and our own estimates (with) strong figures in YPF and LNG," brokerage BPI said in a note to clients.

CCS adjusted earnings before interest and taxes (EBIT) increased to 1.20 billion euros from 1.14 billion. Analysts polled by Reuters had forecast adjusted EBIT of 1.09 billion.

Repsol will hold a conference call at 1300 GMT, where it is expected to face questions on its management after it recently ousted its deputy chairman, and the possibility its core shareholder could sell some of its stake.

Analysts are also likely to ask for an update to Repsol's drilling schedule where the group has had recent exploration success in Argentina and a failure off the coast of Liberia.

(Reporting by Jonathan Gleave; Editing by David Holmes)