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2015-10-19 19:10:00

REPSOL WILL SELL $7.1 BLN, CUTS 38%

REPSOL WILL SELL $7.1 BLN, CUTS 38%

Repsol SA said Thursday it will sell €6.2 billion ($7.1 billion) of noncore assets through 2020 as part of a cost-cutting drive, which also includes a significant cut in oil-exploration spending.

The Spanish oil major said it would reduce capital expenditure by 38% from last year's levels as part of a strategic plan for the next five years. The plan also seeks to cut Repsol's current €14 billion debt pile by half, even under its worst-case scenario—that the price of Brent remains around $50 per barrel.

The plan aims to keep shareholder returns stable in a scenario of contained oil prices and represents a shift in focus from growth toward increased profitability. The company has expanded aggressively in recent years, a process completed with the $8.3 billion takeover of Canadian rival Talisman Energy Inc. in May.

"We don't need growth now. We're not going to grow," Chief Executive Josu Jon Imaz told analysts and reporters. "Cutting debt is our top priority now."

Repsol said Wednesday net profit this year will fall to between €1.25 billion and €1.5 billion from €1.61 billion last year, reflecting lower oil prices and tighter refining margins.

Net profit will also be hit by €450 million of provisions after tax this year to account for the lower value of North American gas, power and oil assets. Earnings before interest, taxes, depreciation and amortization will be between €5.2 billion and €5.45 billion this year, and they should double from that level by 2020, Repsol said.

The strategic plan was made public after weeks of cutbacks by the company in reaction to declining profit. Like its rivals, Repsol has been hurt by a 50% slump in oil prices over the last 12 months. The company has lost a quarter of its market value during that stretch.

Repsol's shares fell again Thursday after the plan was unveiled. Analysts said the company's expectation that Brent oil prices will rise to an average of $65 next year and $90 by 2019, from the current $49, is too optimistic in a market that remains oversupplied.

"We expect oil prices materially lower than the company's base scenario," Goldman Sachs analysts said in a research note. They reiterated their sell rating on Repsol's stock.

Refining margins, which are typically compressed when oil prices rise, are another source of concern. The company said it sees an average of $6.4 per barrel through 2020, an estimate called "too bullish" by Goldman Sachs in light of a $3.8 average since 2010.

Mr. Imaz, the CEO, defended the margin guidance, saying Repsol will benefit from a weaker euro and specific competitive advantages through 2020. He said the company has plenty of non-core assets it can sell, especially as oil prices bounce from current levels.

As an example of asset sales to come, Mr. Imaz cited a deal announced Wednesday with Armstrong Oil & Gas. Under the terms disclosed, the privately held U.S. company will raise its interest in several Alaskan drilling areas where it works with Repsol, in exchange for cash, assets and various other commitments.

Barclays analysts estimate the deal, combined with an agreement to delay planned drilling in coming months, might lower Repsol's capital expenditure by close to €1.5 billion.

Repsol said this month it plans to cut 1,500 positions, 6%, of its staff, over the next three years. In September it sold part of its piped gas business to Gas Natural Distribution and Redexis Gas for €651.5 million and its 10% stake in oil pipeline operator Compania Logistica de Hidrocarburos for €325 million. 

Mr. Imaz said Thursday that Repsol might fully divest itself from the piped gas business. But he ruled out a possible sale of Repsol's 30% stake in gas firm Gas Natural SDG SA, a possibility discussed for years. He said he is "comfortable" with the stake and that, given that Repsol's production is now 70% gas, such a stake provides the company with a variety of future options.

wsj.com

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More: 

REPSOL WILL DOWN 22% 

REPSOL WILL CUT 1,500 JOBS  

REPSOL & TALISMAN: $8 BLN  

REPSOL DISCOVERED OIL  

SPAIN: $7B TO CANARY OIL

 

 

Tags: OIL, GAS, PRICES, REPSOL
REPSOL WILL SELL $7.1 BLN, CUTS 38% September, 20, 09:05:00

OIL PRICE: ABOVE $55 YET

REPSOL WILL SELL $7.1 BLN, CUTS 38% September, 20, 09:00:00

GAS PRICES UP TO $3.146

REPSOL WILL SELL $7.1 BLN, CUTS 38% September, 20, 08:55:00

ЦЕНА URALS: $51,81591

REPSOL WILL SELL $7.1 BLN, CUTS 38% September, 20, 08:50:00

U.S. OIL + 79 TBD, GAS + 788 MCFD

REPSOL WILL SELL $7.1 BLN, CUTS 38% September, 20, 08:45:00

RENEWABLE'S FUTURE

REPSOL WILL SELL $7.1 BLN, CUTS 38% September, 20, 08:40:00

TOTAL BUYS RENEWABLE

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Chronicle:

REPSOL WILL SELL $7.1 BLN, CUTS 38%
September, 20, 08:35:00

BP - AZERBAIJAN OIL DEAL

BP and its partners in Azerbaijan's giant ACG oil production complex agreed Thursday to extend the production sharing contract by 25 years to 2049 and to increase the stake of state-owned SOCAR, reducing the size of their own shares.

REPSOL WILL SELL $7.1 BLN, CUTS 38%
September, 20, 08:30:00

U.S. DEFICIT UP TO $123.1 BLN

The U.S. current-account deficit increased to $123.1 billion (preliminary) in the second quarter of 2017 from $113.5 billion (revised) in the first quarter of 2017, according to statistics released by the Bureau of Economic Analysis (BEA). The deficit increased to 2.6 percent of current-dollar gross domestic product (GDP) from 2.4 percent in the first quarter.

REPSOL WILL SELL $7.1 BLN, CUTS 38%
September, 18, 12:35:00

OIL PRICE: ABOVE $55

U.S. West Texas Intermediate (WTI) crude futures CLc1 were trading up 41 cents, or 0.8 percent, at $50.30 by 0852 GMT, near the three-month high of $50.50 it reached last Thursday. Brent crude futures LCOc1, the benchmark for oil prices outside the United States, were at $55.91 a barrel, up 29 cents, and also not far from the near five-month high of $55.99 touched on Thursday.

REPSOL WILL SELL $7.1 BLN, CUTS 38%
September, 18, 12:30:00

RUSSIA - CHINA - VENEZUELA OIL

“The principal risk regarding Russian and Chinese activities in Venezuela in the near term is that they will exploit the unfolding crisis, including the effect of US sanctions, to deepen their control over Venezuela’s resources, and their [financial] leverage over the country as an anti-US political and military partner,” observed R. Evan Ellis, a senior associate in the Center for Strategic and International Studies’ Americas Program.

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