Repsol Posts 10% Profit Growth in 3Q

Repsol increased net profits by 10% year on year to €527mn ($614mn)  in 3Q 2017. Adjusted net income for the same period was up 88% at €576mn, beating forecasts, with the figure up 39% at €1.7bn for the first nine months of the year. 

“These results reflect the strength of the company’s businesses, bolstered by the efficiency measures put in place to address the current context of low oil prices,” the Spanish producer said.

Realised 3Q prices were up 15% to $47.70/b for liquids and up 21% to $2.70/’000 ft³ for gas.

Production also increased by 3.3% to 693,000 barrels of oil equivalent/day, of which liquids up 5.3% to 252,000 b/d and gas up 2.2% to 2.477bn ft³/d. Five-sixths of that gas was produced in the Americas, in large part a legacy of the takeover of Canadian producer Talisman completed 2015.

Upstream adjusted net income of €148mn in 3Q2017 reversed a €28mn loss in the same 2016 quarter, as Repsol started up the Juniper (Trinidad gas), plus Brazil and UK oilfields, and with resumed Libyan production – partly offset by the divested Tangguh (Indonesian) gas asset and the natural decline of fields and the impact of fluctuating gas demand in Peru and Bolivia. The BP-operated Juniper field started producing in August.

Also Repsol this September installed a new platform on PM3 block that will enable a production hike of some 160mn ft³/d – the second platform Repsol has installed offshore Malaysia this year, following that of Kinabalu-D in June. The Malaysia assets were also part of the Talisman takeover.

Among upcoming investments, Repsol and partners April 26 signed the final investment decision (FID) to develop the offshore Ca Rong Do oil and gas find in Vietnam block 07/03, another Talisman legacy, net investment from Repsol being estimated at $627mn – with production to begin late 2019. Meanwhile Repsol and Indonesian state partner Pertamina have agreed with Algerian state Sonatrach to start phase IV development of block 405a of MLN oilfield in Algeria, requiring net investment by Repsol of $110mn.

Not cited in the results is the Reggane Nord gas development in Algeria, which Repsol and partners hope to start producing 2018. The $3bn project had originally been expected to start up this year and is expected to plateau at around 2.9bn m^3/yr.

Downstream (refining, marketing, trading) adjusted net income increased 27% to €502mn in 3Q2017, as Repsol’s refining margin indicator in Spain reached $7/b, a year on year increase of 37%.

But the firm’s adjusted net loss on corporate items widened to €74mn – largely as its adjusted net income 3Q2017 from Spanish utility Gas Natural was €49mn, down two-fifths, thanks to Repsol’s lower equity stake in the company since September 2016 and lower gas sales.

Mark Smedley