in adjusted net income
increase on the same period in 2018
total proposed shareholder remuneration
increase through scrip dividends
Repsol posted net income of 608 million euros in the first quarter of 2019, in line with the 610 million euros earned between January and March of the previous year.
Adjusted net income, which specifically measures the performance of the company’s businesses (at current cost of supply and excluding the non-recurring earnings), stood at 618 million euros, representing an increase of 6% from the 583 million euros recorded in the first three months of 2018.
These earnings demonstrate Repsol’s solidity and ability to adapt and create value under any circumstances. In this regard, the first quarter of 2019 was marked by oil prices lower than those recorded in the same period of the previous year, with Brent trading at an average of 63.1 dollars per barrel: 6% less than the average recorded between January and March of 2018, when it traded at 66.8 dollars per barrel.
In this context, the Upstream unit continued its trend of positive performance and increased its income by 12.5% to reach 323 million euros. The efficiency measures adopted by the company continued to demonstrate their effectiveness in improving this business unit’s earnings. The exploratory success of this period was also significant, with the company making, in Indonesia, the world’s greatest onshore discovery of the first three months of the year.
For its part, the Downstream unit earned 404 million euros, performing particularly well in the Refining, Trading, and Chemicals areas, and was positively influenced by the appreciation of the dollar against the euro. In addition, Repsol made progress in the development of its electricity and gas business by signing significant agreements with wholesalers and securing new customers.
The company’s EBITDA rose to 1.810 billion euros, a slight increase from the 1.804 billion earned in the first three months of the previous year.
On March 27th, the Repsol Board of Directors agreed to call the company’s Annual General Shareholders Meeting, to be held, foreseeably at second call, on May 31st. Repsol will advance its Good Governance best practices with the proposals set forth in the Agenda, including the separation and transparency of the duties of the Chairman and CEO, the proportion of women on the Board of Directors (greater than 30%), the increased presence of independent directors and the reduction of the number of Board members. In addition, the Board of Directors has agreed to appoint Mariano Marzo Carpio as Lead Independent Director.
Furthermore, the Board will propose the re-election of Directors Antonio Brufau, Josu Jon Imaz, José Manuel Loureda Martiñán, John Robinson West, and Henri Philippe Reichstul. It will also propose the appointment of Aránzazu Estefanía Larrañaga and María Teresa García-Milà Lloveras as Independent Outside Directors. With these new appointments, Repsol will have five women on its Board of Directors, which will be reduced to 15 members.
Additionally, the Board of Directors has agreed to propose a gross shareholder remuneration equivalent to 0.525 euros per share, through the “Repsol Flexible Dividend” program and as a substitute for the final dividend of the 2018 fiscal year. This compensation is in addition to that approved by the company as part of the same program and as a substitute for the traditional interim dividend of 2018, for an equivalent gross amount of 0.425 euros per share. The total shareholder remuneration will thus increase to an equivalent of 0.95 euros per share, 5.6% higher than that of last year.
The Upstream unit increased its earnings to 323 million euros, a 12.5% increase from the 287 million euros recorded in the first three months of 2018. Repsol’s management, the successful implementation of the efficiency and digitalization programs, the reduction of exploration costs, and the positive effects of exchange rates all played a role in this positive performance.
The company produced an average of 700,000 barrels of oil equivalent per day (boe/d), compared to the 727,000 boe/d recorded between January and March of last year. This decrease was primarily due to the end of activity in Libya. As of March 4th, all operations in Libya have resumed.
During the first three months of 2019, the company obtained additional production thanks to the connection of new wells in Marcellus (United States), Duvernay (Canada), and Akacias (Colombia). These were accompanied by the acquisition of Mikel and Visund (both in Norway) and the installation of the Angelin platform (Trinidad and Tobago) in late February.
With regard to exploration activity, Repsol drilled seven wells during the period, four of which were positive. The most significant of these was completed in the Sakakemang block in Indonesia, where the company made the world’s greatest onshore discovery in the first three months of this year, and one of the largest of the last twelve months. The well, known as KBD-2X, is also the country’s largest gas find of the past 18 years and has a preliminary estimation of at least two trillion cubic feet (TCF) of recoverable resources, equivalent to two years’ worth of gas consumption in Spain.
Investment in the Upstream unit increased to 399 million euros between January and March of 2019, of which 85% corresponded to project development and 13% to exploration activities.
The Downstream unit posted an adjusted net income of 404 million euros, compared to 425 million in the same period of last year.
The Refining area improved its performance relative to the first months of 2018, with more efficient management offsetting the worsening international environment. The company conducted a scheduled shutdown of its refinery in Bilbao, where it invested 52 million euros to implement improvements in technology, efficiency, and safety. In 2019 Repsol will carry out an extensive maintenance program at all of its refineries in Spain, in order to ensure maximum availability upon the enactment of new international marine fuel regulations, which will benefit the company competitively.
The Trading area improved its performance, while the Gas and LPG business units saw their earnings affected by a decrease in demand due to a milder winter in North America and the Iberian Peninsula.
The Chemicals unit increased sales and continued its differentiation strategy with new added-value products. The company is developing polymers to be used as raw material for 3D printing, a technology that has numerous applications in various sectors. Additionally, in late March the company acquired 17% of the shares in the Spanish company Recreus, one of the most important manufacturers in this sector.
With regard to its electricity and gas business, Repsol continued to add new customers to its portfolio. In addition, the company expanded its partnership with El Corte Inglés, and will offer electricity and gas to the department store chain’s customers at competitive and personalized rates, as well as discounts on fuel. Furthermore, Repsol became the chain’s main energy provider by number of establishments.
The partnership with El Corte Inglés is also expanding to Repsol’s mobile payment app, Waylet, which will be available for use in mid-June at all of the chain’s stores, with exclusive promotions and discounts.
The company continued to strengthen its position as a mobility leader in Spain. On April 1st, it opened the Iberian Peninsula’s first ultra-fast charging point for electric vehicles, which is also one of the first in southern Europe. Repsol plans to offer this cutting-edge technology at four other service stations belonging to its network in 2019. In addition, the company currently has 31 fast charging points at its service stations and participates in a network with more than 1,700 charging points, 200 of which are publicly accessible.
Investment in the Downstream unit during the first three months of the year amounted to 189 million euros.
The information included in this document is published pursuant to the provision of article 226 of the Spanish Securities Market Law.
This document contains information and statements or claims which are estimates or future projections for Repsol. Said estimates or projections may include statements regarding plans, goals, or current expectations of Repsol and its management, including statements with respect to trends affecting Repsol’s financial condition, financial ratios, results of operations, business, strategy, geographic concentration, production volume and reserves, capital expenditures, costs savings, investments and dividend payout policies. These forward-looking statements may also include assumptions regarding future economic and other conditions, such as future crude oil and other prices, refining and marketing margins and exchange rates and are generally identified by the words “expects”, “anticipates”, “forecasts”, “believes”, “estimates”, “notices” and similar expressions. These statements are not guarantees of future performance, prices, margins, exchange rates or other events and are subject to material risks, uncertainties, changes and other factors which may be beyond Repsol’s control or may be difficult to predict. Within those risks are those factors described in the filings made by Repsol and its affiliates with the Comisión Nacional del Mercado de Valores in Spain and with any other supervisory authority of those markets where the securities issued by Repsol and/or its affiliates are listed.
Unless so required by law, Repsol does not undertake to publicly update or revise these forward-looking statements even if new data is published or new facts are produced.
Any of the resources mentioned do not to date constitute proved resources and will be recognized as such when they meet the formal criteria required by the “SPE/WPC/AAPG/SPEE Petroleum Resources Management System” (SPE-PRMS) (SPE – Society of Petroleum Engineers).
In October 2015, the European Securities Markets Authority (ESMA) published its Guidelines on Alternative Performance Measures (APMs). The guidelines apply to regulated information published on or after 3 July 2016. Information and disclosures related to APM used on the present press release are included in Appendix III “Alternative Performance Measures” of the Interim consolidated financial statements for Q1 2019 and Repsol’s website.
This document does not constitute an offer or invitation to purchase or subscribe shares, pursuant to the provisions of the Royal Decree 4/2015 of the 23rd of October, which approves the Consolidated Text of the Securities Market Law and its development regulations. In addition, this document does not constitute an offer to purchase, sell, or exchange, neither a request for an offer of purchase, sale or exchange of securities in any other jurisdiction.
The information contained herein has not been verified or revised by the External Auditors of Repsol.