March 25, 2020 / 6:51 PM / in 13 days

UPDATE 1-Spain's Repsol slashes spending to limit damage from price crash, coronavirus

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MADRID, March 25 (Reuters) - Spain’s Repsol said on Wednesday it would slash investments by 26% this year to limit the damage caused by sliding oil and gas prices and the coronavirus epidemic.

Oil and gas companies the world over are tightening their purse strings to accommodate prices that have fallen by more than half since the start of the year as the virus shut industry and eroded demand, just as major producers Saudi Arabia and Russia pushed to ramp up output.

Repsol’s directors met on Wednesday and decided to cut planned 2020 capital expenditure by more than 1 billion euros ($1.09 billion), and operating expenditure by more than 350 million euros.

The meeting focused on “the global impact of Covid-19, the downturn in oil and gas market prices”, the company said.

Shareholders can still expect to receive a dividend of 1 euro per share for the full year, but the company has scrapped a plan to reduce the number of shares by 5%.

The scale of the current downturn is prompting some investors to question oil majors’ time-honoured commitment to juicy dividends, and warn them off raising more debt.

Taking into account the new measures, Repsol’s net debt will be no higher at the end of 2020 than it was at the end of the previous year, the company said. It had originally targeted a 16% reduction over the course of the year, from 4.22 billion euros at the end of the 2019.

Repsol is now banking on Brent Crude commanding $35 per barrel between April and December. This compares to a $50 per barrel base measure it used to draw up its strategy in 2018.

A Repsol spokesman declined to give an estimate for what oil price allows the company to generate profit, often referred to as breakeven.

An update to its strategic plan, originally scheduled for release on May 5, will be delayed indefinitely.

Repsol said it would stick to its plan to reduce carbon emissions to net-zero by 2050. ($1 = 0.9205 euros) (Reporting by Isla Binnie; editing by Diane Craft)

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