First-half net income is 2.117 billion Euros

Repsols net income rises 24%

Press Release 31/07/2008 15:45
  • Income from operations rises 23% to 3.502 billion euros.
  • Profit from Repsol’s three core businesses (upstream, downstream and LNG) advances 20% to 2.502 billion euros.
  • YPF’s profit rises 3,2%, to 644 million euros.
  • Production begins at the I/R field in Libya, Repsol’s largest discovery in that country.
  • Repsol makes a second oil and gas find in Brazil. The discovery of light crude in Guará adds to that of Carioca.
  • Dividend payments rise 39% to one euro per share.

31 July 2008 - 09:00 CEST | PDF | 56.82 KB

Repsol YPF posted net income of 2.117 billion euros in the first half of 2008, a 24.1% rise on the year-earlier period. These earnings are reported in an environment marked by high oil prices, a fall in international refining margins and the weakness of the dollar against the euro.

Operating profit at Repsol YPF was 3.502 billion euros, a rise of 23% year-on-year. The performance of the core business is especially significant as earnings there rose 20.2%, to 2.502 billion euros.  

Operating profit at the exploration and production unit, which rose 49.6%, helped offset a 2% decline in refining and marketing of oil products. YPF y Gas Natural, in which Repsol owns a significant share, raised profit by 3.2% and 7.1% respectively.

In July, Repsol paid a complimentary dividend of 0.5 euros a share, taking the total dividend paid from 2007 earnings to 1 euro a share, 39% higher than the previous year. 

The 13% average depreciation of the dollar against the euro represented a 415 million euro reduction in the company’s operating income.

As announced on February 28 and reported in the first quarter earnings, Repsol is made up of a core business which includes upstream, downstream and LNG, and two companies in which Repsol holds a significant stake: YPF  and Gas Natural SDG.

REPSOL’S CORE BUSINESS GREW 20,2%

The company´s core business, made up of the upstream, downstream and LNG units, posted income from operations of 2.502 billion euros, 20,2% higher than in the first half of 2007.

Upstream profit rose 49.6% year-on-year to 1.327 billion euros, due mostly to a significant 81.8% increase in the price of liquids. This result is in line with the objectives  outlined in the 2008-2012 strategic plan.

The improvement in the realisation price of liquids made up for the decline in hydrocarbons production during the semester. The depreciation of the dollar against the euro diminished earnings by 200 million euros.

Profit from operations at the liquefied natural gas (LNG) unit was 50 million euros, a rise of 8.7% from the previous year. The improvement in earnings was largely the result of optimisation of the Repsol´s tankers, increased gas sales and greater electricity production.

Profit from operations at the downstream unit was 1.125 billion euros compared with 1.148 billion in the same period of 2007, a 2% fall. The decline is due to lower international refining margins, especially in petrochemicals, and, to a lesser degree, a fall in sales and the weakness of the dollar.

Investment in the downstream business was 630 million euros compared with 368 million euros in the same period of 2007, mostly on ongoing projects and improvements in plant operation. As part of the 2008-2012 strategic plan, Repsol is expanding the refineries in Cartagena and Bilbao in Spain, and Sines in Portugal.

EARNINGS AT YPF ROSE 3.2%

Operating income at YPF rose 3.2% from the year-earlier period to 644 million euros.

The increase was mostly the result of an improvement in margins of oil products sales and the average price of gas, a consequence of a better sales mix.

GAS NATURAL SDG GAINED 7.1%

Gas Natural SDG in the first half posted operating income of 287 million euros a rise of 7.1% from the 268 million euros reported a year earlier.

The company’s Spanish power production and retail business unit made a noteworthy contribution to the raise, almost tripling its year-earlier profit because of higher wholesale power prices.

FIRST-HALF HIGHLIGHTS

Strategic Plan 2008-2012

Repsol YPF Chairman Antonio Brufau in February presented the 2008-2012, Strategic Plan which sets out the main growth vectors of the company for the next few years based on ten key growth projects which account for 60% of the investment in the core business through 2012 (12.3 billion euros).

The new plan, described by Brufau as “ambitious and realistic” calls for a total investment of 32.8 billion euros to increase net income by 2.8 times by 2012, EBITDA by 1.8 times and operating income by 2.1 times.  

Guará: New deepwater discovery in Brazil

Repsol in June announced a second deepwater oil discovery in the Santos Basin, off the coast of Brazil. The new discovery, called Guará, is in block BM-S-9 adjacent to the Carioca oil field discovered at the end of 2007 and which contains high grade oil according to initial estimates.

The presence of light 28º API crude oil has been detected  in the new field, discovered by a consortium made up of Petrobras (45% and operator), BG (30%) and Repsol YPF (25%), 310 km from the coast of the state of Sao Paulo at a depth of 5,000 meters.

Guará is considered one of the main growth areas for the company worldwide. A second well is being drilled to search for oil at greater depths. The developemnt of the deepwater Santos Basin is one of the 10 key projects outlined in the 2008-2012 strategic plan. 

Start of Production at the I/R field in Libya

In the second quarter Repsol began production at the I/R field in Libya, one of the 10 key projects outlined in the 2008-2012 strategic plan. Initial output is 6.300 boe/day and a plateau production of 90.000 boe/day is expected. 

14.9% of YPF sold to the Petersen Group

Repsol on February 21 agreed to sell 14.9% of YPF to Grupo Petersen for 2.235 billion dollars. The deal, which values YPF at 15 billion dollars, is part of Repsol´s strategy to improve the geographic distribution of its assets, managing them globally while retaining a local focus. 

The agreement also includes an option on an additional 10.1% of YPF, allowing   Grupo Petersen to reach a 25% stake. 

A 39% raise in dividends 

Repsol agreed to pay a gross dividend of 1 euro per share from 2007 earnings, a raise of 39% from the previous year. This increase is in line with the current management´s policy of increasing payments to shareholders.  

Sale of  de service stations in Ecuador 

Repsol agreed to sell to the Peruvian-Chilean PRIMAX group the Ecuadorian companies, RECESA and Oiltrader, for 47 million dollars.   This agreement includes the sale of Repsol's 123 service stations, including those owned directly as well as the franchises, distributed throughout Ecuador. Likewise, this includes the sale of the Repsol industrial sales business in that country, as well as the commercial and logistic infrastructure, and the lubricant and aviation businesses. In the lubricants business Repsol will maintain with PRIMAX a commercialization and distribution contract, and a technical assistance contract for the aviation business. 

The sale of RECESA and Oiltrader is part of the non-strategic asset divestment policy contemplated in the 2008-2012 Strategic Plan.

Investment of 3.2 billion euros for Cartagena refinery

On 8 January, an investment of more than 3.2 billion euros was approved for the expansion of the Cartagena refinery, converting this industrial complex into one of the most modern in the world and doubling its production capacity to 11 million tons per year (220.000 b/d).

This project will help reduce the increasing shorfall of medium distilled products in Spain. The Cartagena project is part of Repsol´s program to adapt its installations to the production of clean fuels for transport, encourage the use of biofuels (bio diesel) and improve energy efficiency, security and environmental impact.

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