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UPDATE 2-Repsol moves past loss of YPF with strong growth
February 28, 2013 / 11:07 AM / 5 years ago

UPDATE 2-Repsol moves past loss of YPF with strong growth

* Quarterly output grows 19 percent on Libya and Bolivia

* Adjusted net profit 517 million euros, beats forecasts

* Adjusted EBIT 1.05 billion euros versus 1.01 billion poll

* Shares up 0.7 pct, add to 4 pct rise Weds

By Tracy Rucinski

MADRID, Feb 28 (Reuters) - Spanish oil major Repsol SA posted a forecast-beating rise in quarterly profit as strong production growth brought a positive close to a year marred by the loss of its Argentine unit.

Repsol spent much of 2012 in recovery mode after the Argentina’s expropriation of its majority stake in YPF in April triggered concerns on funding and growth.

Net fourth-quarter profit, adjusted for one-time items and inventory costs, came in at 517 million euros ($678 million), the company said on Thursday, above the 355 million posted last year with YPF and beating even the highest forecast in a Reuters poll.

“After its annus horribilis in 2012, Repsol has posted strong numbers for the final quarter in all divisions,” Investec Securities analyst Stuart Joyner said in a note to clients.

Profits were driven by a recovery in production from Libya and new output from Bolivia, the United States, Spain and Russia - four of 10 main projects in a new strategic plan.

Upstream production - which still comes mainly from Trinidad & Tobago, Libya and Venezuela - grew 19 percent to 347,000 barrels of oil equivalent (BOE) per day in the quarter.

The company began commercial production at the large Sapinhoa field in Brazil in the start of January, expected to reach an output of 120,000 BOE in the first development phase.

Repsol also achieved a reserve replacement ratio of 204 percent, one of the highest of European integrated oil companies, thanks to its successful exploration projects.


Its shares, which lost 31 percent last year due to the YPF expropriation and debt woes, rose 0.7 percent to 16.2 euros by mid morning, extending Wednesday’s 4 percent gain and outpacing a 0.1 percent rise in European oil and gas stocks.

The stock trades at 8.9 times forecast earnings for 2013, slightly higher than the sector average of 8.7 times, according to Thomson Reuters data.

The painful seizure of cash contributor YPF forced Repsol to sell assets over the year in order to cut debt and raise funds for exploration.

After agreeing to sell liquified natural gas assets to Royal Dutch Shell earlier this week, Repsol has said net debt will fall to 2.2 billion euros from 4.4 billion in 2012. .

Some analysts expect the divestment to trigger a one-notch upgrade to Repsol’s credit ratings, which stand just above “junk” status, though Investec’s Joyner warned of debt still linked to the Canadian terminal Canaport that was rejected by Shell.

Recurrent operating growth at Repsol’s liquified natural gas division was flat in the fourth quarter year-on-year, while its downstream business more than doubled thanks to improved refining margins.

Repsol’s underlying earnings before interest and tax (EBIT), which exclude special items and inventory holding effects, were 1.05 billion euros in the fourth quarter versus 781 million euros a year ago when it had YPF, also beating a Reuters poll forecast for an average of 1.01 billion.

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