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February 25, 2010 3:17 pm
Repsol YPF, the Spanish oil and gas group, on Thursday unveiled a 39 per cent year-on-year decline in net profits, with the fall reflecting weak market prices and a slump in demand for refined products.
The company said net profits for 2009 were €1.6bn, compared with €2.6bn in 2008. Upstream production of oil and gas averaged 906,000 barrels of oil equivalent a day, down from 952,000 in 2008. International oil prices, meanwhile, were about 38 per cent lower year-on-year, while gas prices were down more than 55 per cent. Total group revenues for the year were €49bn, compared with €61.7bn previously.
Repsol said refining margins at its Spanish plants declined 82 per cent as a slump in demand from industry and households, coupled with sector overcapacity, drove down prices.
The board on Wednesday approved a 19 per cent cut in the dividend with a view to meeting upstream investment targets.
“In spite of the difficult financial environment, upstream investments totalled €1.2bn [last year],” Repsol said.
It said this had resulted in “the most successful exploratory campaign of [the company’s] history”, with 15 significant discoveries. The upstream reserve replacement rate hit 94 per cent in 2009, up from 65 per cent in 2008, the company said.
Repsol is spending heavily on exploration in Brazil’s offshore Santos Basin and other regions to boost production while diluting its exposure to the mature Argentine fields of its 85 per cent-controlled YPF subsidiary. It plans gradually to reduce its holding in the Argentine business through a stock market float and further direct stake sales.
“The exploration and production unit should continue to be the driver of the investment case on the back of the extensive drilling campaign taking place, mainly in Brazil,” said Banco BPI.
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