April 27, 2012 / 11:30 AM / 6 years ago

Repsol weighs strategy after loss of YPF

MADRID (Reuters) - Spanish oil major Repsol (REP.MC), which is weighing business options after the seizing of its energy firm YPF (YPFD.BA) by Argentina, said a deal with domestic utility Gas Natural (GAS.MC) was not on the cards.

“A deal with Gas Natural is not part of our strategy,” a Repsol spokesman said on Friday.

Newspaper Cinco Dias reported the oil group’s core shareholder, Spanish banking group La Caixa (CABK.MC), was orchestrating a merger between the two Spanish energy groups to prevent any hostile takeover moves on Repsol.

La Caixa, which holds 12.8 percent of Repsol and 35.3 percent of Gas Natural, also denied studying a merger between the two companies.

Repsol Chairman Antonio Brufau has said he would unveil a new business plan in May, following Argentina’s announcement last week that it would seize control of the 51 percent of YPF owned by Repsol.

The Argentine government’s bill to expropriate YPF sailed through the Senate and then a lower house committee on Thursday, setting the stage for final legislative approval next week.

“Repsol will try to address two issues with its business plan: its financial situation and how it can boost upstream operations after YPF,” said Alvaro Navarro, equity analyst at Intermoney Valores in Madrid.

Repsol, which previously focused on refining, bought YPF in 1999 for exposure to higher margin upstream oil and gas production. YPF accounts for half of Repsol group output and 21 percent of net profit.

SALE OF GAS NATURAL?

Another expansion option for Repsol is to sell its 30 percent stake in Gas Natural, worth 3.3 billion euros at current prices, and use the proceeds to buy oil assets.

“We think it would make much more sense to sell the stake in Gas Natural as it would allow Repsol to reduce leverage and increase its focus on the oil sector,” Espirito Santo Investment Bank said.

Newspaper Cinco Dias tipped the possible purchase of Portugal oil firm Galp GALP.MC.

However it may be too soon for Repsol to get entangled in a takeover deal as it enters a legal battle for compensation for YPF.

Repsol has said it will seek $9.3 billion for its YPF stake. Argentina has indicated it will not pay that much and the final amount will be decided by an Argentine court.

Also in the air is whether Repsol will be repaid a $1.9 billion loan, extended to Grupo Petersen to buy its 25.5 percent stake in YPF.

“Until all of this is resolved, rather than a company I think they’d go for more assets in Africa or the United States,” Intermoney’s Navarro said.

Gas Natural’s shares were up 1.8 percent to 10.82 euros by 0930 GMT while Repsol added 0.2 percent.

Additional reporting by Sonya Dowsett; Editing by David Cowell

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