REPSOL WILL DOWN 22%
Spanish oil major Repsol said on Wednesday its net profit could fall by up to 22 percent in 2015, hit by low crude prices and a loss of value of some of its North-American assets which will trigger a big impairment charge in the third quarter.
The group will present its 2016-2020 strategic plan on Thursday, less than a year after buying Canadian peer Talisman in a deal that raised its international profile and boosted output but also drastically increased its debt.
It is set to step up asset sales and cost and investment cuts as part of the new strategy which will seek to protect its investment grade rating and dividend from the slump in prices in the past year.
Repsol said it saw net profit reaching a range of between 1.25 billion and 1.5 billion euros ($1.43-1.72 billion) at the end of 2015, down from the 1.61 billion euros in 2014.
Its net profit cleaned of inventory effects is seen at between 1.6 billion and 1.8 billion euros, down from 1.7 billion euros in 2014.
The company said it would book a provision of 450 million euros in the third quarter from impairments at its Gas & Power and Mississippian Lime units in the United States.
The underlying business also showed signs of coming under increased pressure.
Repsol is still aiming for a full-year increase of earnings before interest, tax, depreciation and amortisation (EBITDA) but it switched on Wednesday to a target cleaned of inventory effects, which is deemed easier to achieve in the current context of lower oil prices.
The firm previously saw its 2015 EBITDA at between 5 billion and 5.5 billion euros, or an increase of up to 45 percent from 2014. It now sees its CCS EBITDA at between 5.2 billion and 5.45 billion euros, or an increase of up to 15 percent from 2014.
Its production, while up in the third quarter at 651,000 barrels per day from 526,000 barrels per day in the previous three months, was also below a 680,000 barrels per day target announced at the time of the Talisman purchase.
Refining margins, which shored up the balance sheet in recent quarters and offset the price pressure, were down slightly at $8.8 per barrel in the three months between July and September from $9.1 per barrel in the second quarter.