* Quarterly adjusted net profit beats forecast
* Profit driven by output in Libya and Bolivia
* LNG division strong before planned assets sale
* Shares up 2.6 percent
By Tracy Rucinski
MADRID, Nov 8 Spanish oil company Repsol
beat third-quarter profit forecasts and said assets it
is selling to recover from the nationalisation of a key
Argentinian unit are performing well.
Argentine President Cristina Fernandez seized Repsol's
majority stake in YPF in April, raising concerns over its
ability to fund development projects given that the unit
accounted for half of group output.
Repsol is trying to sell liquefied natural gas assets in
Canada, Trinidad and Tobago and Peru to boost its finances and
credit ratings. It said on Thursday their income surged.
Excluding YPF, Repsol posted 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.
Repsol shares, which have lost a third of their value so far
this year on Argentine and debt woes, rose 2.6 percent in Madrid
trading, with analysts citing solid results across all of the
Still, analysts said its future stock performance depended
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 and higher volumes.
Repsol has received binding offers for the LNG package and
Financial Director Miguel Martinez said on Thursday it expected
to seal the sale in January.
The firm 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.
While suffering a huge loss in production from its YPF unit,
the company said production in remaining areas is growing.
Recurring operating profit at the exploration and production
division, excluding YPF, surged 97 percent in the third-quarter,
driven by a recovery in output in Libya and production increases
in Bolivia and the United States.
Repsol also said it made recent new discoveries in Algeria
and Colombia, meaning the group has exceeded its 2012 target for
new resources that could turn into reserves.
In its traditional refining business, margins more than
tripled thanks to expansion at its Cartagena and Bilbao
refineries, helping to compensate for a 9 percent fall in fuel
sales in crisis-hit Spain and weakness in its chemicals unit.
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.
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.
Repsol is seeking compensation for the controversial loss of
YPF in international courts but any settlement may take years.