Repsol Achieves Six-Year Production High

Spain’s Repsol reported May 4 that a six-year high in production volume in 1Q2018, thanks to the start-up in 2H2017 of gas fields in Algeria and offshore Trinidad, helped to boost upstream earnings.

Repsol's group net income fell to €610mn ($731mn) in 1Q, down from €689mn in 1Q2017. However its adjusted net income, which Repsol says indicates underlying business performance, was up 6% year on year to €616mn thanks to improved flexibility and efficiencies in its business model; whereas crude oil prices firmed (Brent +24%), gas prices decreased (Henry Hub -9.4%).

Upstream adjusted net income increased by 43% year on year to €320mn, with production reaching 727,000 barrels of oil equivalent, of which 63% was gas and 37% liquids – the highest since 2012.

Increased activity in Libya, the start-up of Juniper (Trinidad gas), Shaw and Cayley (UK oil), Reggane (Algeria gas) and Kinabalu (Malaysia oil), and the acquisition announced in February of the Visund field (Norway oil and gas) all contributed to the higher production figure, which it had already disclosed last month.

Downstream adjusted net income declined to €425mn, from €500mn in 1Q2017, although Repsol said its trading/gas & power unit (part of Downstream) increased earnings thanks to higher margins, helped by the low January 2018 temperatures in the northeast US.

Repsol announced in February 2018 that it would divest its 20.072% stake in Spanish energy marketer Gas Natural; its results show this has yet to be completed, although the stake has been classed as a “discontinued operation.”  Separately, Repsol reported €63mn of "provisions to cover credit risk in Venezuela" in 1Q2018.