Repsol posted a net income of 1.120 billion euros in the first nine months of 2016, a 35% increase from the 832 million in the same period of the previous year.
The efficiency and savings measures implemented by Repsol throughout the year improved earnings and bolstered the company’s resilience to the current environment of depressed crude oil and gas prices. This, together with the dynamic management of the company’s asset portfolio, allowed for a net debt reduction of 1.946 billion euros since the end of 2015.
All Repsol’s business units have showed positive results in this period. Especially significant is the 668 million-euro increase in adjusted net income in the Upstream unit, from a 633 million-euro loss in the first nine months of 2015 to a profit of 35 million euros in the first nine months of 2016. In the third quarter the chemicals business unit maintained the solid performance of previous quarters due to efficiency and transformation initiatives implemented which improved sales and made the most of better international margins.
During the period, international benchmark prices suffered a notable decline in comparison with the first nine months of 2015. The average Brent crude price fell 24%, the WTI dropped 19% and Henry Hub declined 18%.
Adjusted net income was 1.224 billion euros, compared with 1.399 billion euros in the same period of the previous year, which had included exceptional financial results of more than 500 million euros, essentially due to the position in dollars that Repsol held after receiving payment for the expropriation of YPF, which subsequently went toward the acquisition of Talisman.
The Group’s EBITDA increased by 5% to reach 3.558 billion euros, helped by optimization measures implemented in the exploration and production business and in corporate company units.
Average hydrocarbon production increased to 693,800 barrels of oil equivalent per day (boe/d), 36% more than that produced during the same period in 2015, principally because of the incorporation of Talisman assets and the increases in production from Venezuela, Bolivia, Brazil and Peru.
Net debt decreased by 1.946 billion euros since the end of 2015 to 9.988 billion euros. Additionally, in recent months the company launched initiatives that took advantage of market conditions to reduce the average financial cost of its debt.
Additionally, the company has increased its savings and synergies target for the full year to 1.4 billion euros following the achievement of 98% of the initial objective of 1.1 billion euros
Net income and adjusted net income for the third quarter were 481 and 307 million euros respectively, significantly higher than in the year-ago period.
The adjusted net income of the Upstream area was 35 million euros for the first nine months of 2016, an improvement of 668 million from the year-earlier period, when a loss of 633 million euros was posted. This progress was made possible through the implementation of an ambitious efficiency program which has generated significant savings and lower exploration costs which, added to increased production, contributed to the company’s improved results.
The intense efficiency program being carried out by Repsol in the exploration and production business includes commercial, technical and process improvement initiatives that, in addition to improving cash generation, will also increase the company’s sustainability and efficiency in the medium and long term.
The positive performance of the Upstream unit is especially significant considering the depressed oil and gas price scenario and the steep decline in prices compared with the same period of 2015. In the first nine months of 2016, the average Brent price fell 24% compared with the same period of the previous year, the WTI price fell 19% and the Henry Hub price fell 18%.
At the same time, Repsol increased average production of hydrocarbons to 693,800 barrels of oil equivalent a day, a level that is in line with what was predicted by the company in its 2016-2020 Strategic Plan. This figure represents an increase of 36% compared with the first nine months of 2015 and is fundamentally due to the incorporation of Talisman assets and the increase in production from Venezuela, Bolivia, Brazil and Peru.
The adjusted net income for the Downstream area totaled 1.329 billion euros, compared with the 1.655 billion euros obtained between January and September 2015, when refining margins were extraordinarily high.
The Chemicals business benefited from an environment of high international margins, helped by process improvements, investment in new equipment and the internationalization strategy implemented in recent years.
With regard to Refining, maintenance shutdowns planned at the industrial facilities in Cartagena and Tarragona had an impact on the company’s main variables during the first nine months. Repsol increased distillation and production capacity utilization in the third quarter following the completion of its 2016 maintenance program at all of its facilities in Spain.
The refining margin indicator stood at 6 dollars per barrel, 2.9 dollars per barrel below that registered in the first nine months of 2015. In the fourth quarter, margins have improved significantly, to between 7 and 9 dollars per barrel.
Results table PDF (108KB).
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This document contains information and statements that contains estimates or future projections for Repsol. This document contains statements that Repsol believes constitute forward-looking statements which may include statements regarding the intent, belief, 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.
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 V “Alternative Performance Measures” of the Interim Condensed Consolidated Financial Statements for the nine-month period ended 30 September 2016.
Repsol does not undertake to publicly update or revise these forward-looking statements even if experience or future changes make it clear that the projected performance, conditions or events expressed or implied therein will not be realized.
The information contained in the document has not been verified or revised by the External Auditors of Repsol.