UPDATE 2-Repsol cuts output growth target on Libya outages

Thu Nov 7, 2013 9:47am EST

Related Topics

* Third-quarter adjusted net profit 387 mln euros, in line

* Cuts 2013 output growth target to 7 percent from 10

* No hurry for Gas Natural stake sale - CFO (Recasts with revised production target, Gas Natural plans)

By Tracy Rucinski and Andrés González

MADRID, Nov 7 (Reuters) - Spanish oil major Repsol cut its 2013 production growth target on Thursday to reflect outages in conflict-hit Libya, which it also blamed for a decline in third-quarter profit.

Volumes in Libya, which account for 12 percent of Repsol's total output, have dropped as social unrest in the resource-rich country has escalated, also forcing Italian peer Eni to cut its annual production outlook last week.

Repsol said growth was likely to be around 7 percent this year, down from a previous forecast for 10 percent but in line with a longer-term target for output to reach 500,000 barrels of oil equivalent (BOE) per day in 2016.

"When we had the second-quarter results presentation I was quite confident that the 10 percent increase was reachable, but with disruptions in Libya it's difficult to say," Chief Financial Officer Miguel Martinez said on an analyst call.

"If things develop normally, I'd say 7 percent, basically in line with the long-term production goal."

After strong growth in the first half, Repsol's output rose a mere 1.5 percent to 344,300 barrels of oil equivalent (BOE) per day in the third quarter, with new start-ups in Bolivia, Russia and Brazil barely making up for the declines in Libya.

This, combined with a 60 percent drop in refining margins, hit quarterly profit, echoing the woes of European oil peers in the third quarter.

Net profit adjusted for one-time items and changes in the value of inventories fell an annual 22 percent to 388 million euros ($525 million), in line with a Reuters poll forecast.

DIFFERENT PATH

Other European integrated oil majors last week promised to control spending and return cash to investors through asset sales, share buybacks or dividends.

But the Spanish company is on a different path, having already been forced to take measures to shore up its finances and keep shareholders happy after the nationalisation of its Argentine unit YPF last year.

Shares have risen by a third over the past year, nearly doubling from a 10.56 euro low hit in the months following the YPF loss, boosted by the $6.7 billion sale of liquefied natural gas assets and a 3 billion-euro preference share buy back plan.

Following the LNG sale, Repsol was in talks to sell its 30 percent stake in Gas Natural Fenosa to raise funds for further investments in exploration and production, but CFO Martinez said any sale was on hold until a clear investment alternative emerges.

In a bid to diversify away from high-risk countries like Libya, Repsol had been eyeing opportunities in North America, but the lack of an imminent buy option has combined with waning interest in Gas Natural to put the breaks on the sale, sources said last month.

Shares in Repsol, which is still seeking compensation for YPF, trade at a 22 percent premium to its integrated oil and gas peers when measured on a forward earnings multiple, based on Thomson Reuters data.

By 1415 GMT its shares were down 1.3 percent at 19.51 euros. ($1 = 0.7392 euros) (Editing by Julien Toyer, David Holmes and David Evans)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.