(Corrects to clarify net profit comparison in 4th and 5th
* Quarterly adjusted net profit beats forecast
* Profit driven by output in Libya and Bolivia
* LNG division strong before planned assets sale
* Shares up 1.8 percent
By Tracy Rucinski
MADRID, Nov 8 Spanish oil firm Repsol
beat third-quarter profit forecasts on Thursday, driven by
higher output and a strong performance from its liquefied
natural gas business ahead of the division's planned sale.
Repsol is trying to sell LNG assets in Canada, Trinidad and
Tobago and Peru in a bid to boost its finances and credit
ratings after losing control of its Argentine unit YPF.
Argentine President Cristina Fernandez took over Repsol's
majority stake in YPF in April, raising concerns over the
Spanish company's ability to fund development projects given
that the unit accounted for half of group output.
Repsol recovered from the loss of YPF in the third quarter,
posting an 89 percent rise in net profit adjusted for one-time
items and inventory costs to 496 million euros ($633 million)
from 262 million on a proforma basis a year ago.
This compares with the 429 million euros third-quarter net
profit it posted last year when it still had majority control of
Repsol's shares, which have lost a third of their value so
far this year, were up 1.8 percent at 1046 GMT on solid results
across all of the company's divisions, though analysts said its
future stock performance will hang on a successful LNG sale.
"Repsol needs this sale to generate fresh funds and continue
reducing debt after the loss of YPF," Intermoney analyst Alvaro
In the third quarter, operating income from the LNG division
surged 75 percent to 189 million euros, boosted by improved
commercial margins worldwide.
Repsol has received at least five offers for the LNG
package, which includes a 75 percent stake in a regasification
plant in Canada, a 20 percent stake in a liquefaction plant in
Peru and a 23 percent interest in the Atlantic liquefaction
plant in Trinidad and Tobago.
The company has not provided an official valuation of the
LNG interests but in a presentation in August said they had
off-balance sheet debt of 3.6 billion euros and gross debt of 1
If Repsol does not sell the assets soon, it has said it will
proceed with a plan to convert 3 billion euros of preference
shares into equity, which would also be a way of cutting debt.
Credit rating agencies have warned Spanish companies they
must reduce debt if they want to hang on to coveted investment
grade ratings while Spain hovers on the brink of a downgrade to
junk status in the midst of its sovereign debt crisis and
Repsol's net debt reached 4.98 billion euros at the end of
September, excluding the 3 billion euros of preference shares,
down 4.9 percent from end-June.
Repsol's exploration and production division also drove
third-quarter profits thanks to a recovery in output in Libya
and an additional pick-up in Bolivia.
The company's output rose 9 percent to 327,489 barrels of
oil equivalent per day in the nine months to September from a
As for its traditional refining business, a 300 percent
surge in margins mainly thanks to expansion at its Cartagena
refinery helped compensate for a 9 percent decline in fuel sales
in crisis-hit Spain and weakness in its chemicals division.
Adjusted CCS earnings before interest and tax (EBIT), which
exclude special items and inventory holding effects, rose 64
percent to 1.3 billion euros in the third quarter compared with
a Reuters poll average of 1.1 billion.
Repsol also said it made new discoveries in Algeria and
Colombia, which mean the group has exceeded its 2012 target for
Back in Argentina, YPF reported a 51 percent decline in
third-quarter net profit on Wednesday as domestic crude prices
failed to keep pace with rising production costs.
(Editing by Mark Potter and Mike Nesbit)