OREANDA-NEWS. Net income during the first quarter of 2013 rose 1.6% to 631 million euros. These earnings, at current cost of supply, are especially significant as the year-earlier quarter included earnings from YPF.

The Upstream unit consolidated the positive trend of previous quarters with an operating income of 655 million euros, based on increased production.
Hydrocarbons output increased 11.4% during the quarter as the company started production from five of the key projects outlined in the 2012-2016 Strategic plan, and greater activity in Trinidad and Tobago.
The Downstream unit’s operating income increased 113.6% to 173 million euros at current cost of supply.
Wider refining margins and higher distillation volumes achieved by the expansion projects at Cartagena and Bilbao more than made up for the fall in sales and sales margins at forecourts.
Repsol in February agreed to sell to Shell LNG assets for USD 6.7 billion. The deal will generate a pre-tax gain of USD 3.5 billion.
In March, Repsol sold treasury shares to Temasek for 1.036 billion euros. The agreement reflects the confidence by international investors in Repsol’s growth strategy and increases the company’s attractiveness.

Repsol posted net income of 631 million euros in the first quarter of 2013, a rise of 1.6% from the year-earlier period at current cost of supply. Calculated based on MIFO criteria, net income was 634 million euros. These earnings are especially significant as the first quarter of 2012 included earnings from YPF.

The improved results are based on a strong performance from all of the company’s business units. Operating income from continued operations at current cost of supply rose 19% to 1.287 billion euros.

The Upstream unit continued its growth trend, performing well during the quarter. Production rose 11.4% following the start-up of five of the company’s key projects outlined in the 2012-2016 Strategic Plan. Especially significant is the start-up of the giant Sapinhoб field in Brazil, one of the largest developed in that country to date. Greater activity at Trinidad and Tobago also helped boost output.

The downstream unit posted increased earnings following the investments made in the company’s refining system. The completion of the Cartagena and Bilbao projects have widened refining margins and increased the company’s capacity, setting the assets amongst the industry’s best.

Additionally, the company surpassed its 2012-2016 divestment goals at the end of February following the agreement to sell to Shell LNG (liquefied natural gas) assets for 6.7 billion euros.

At the end of the quarter, the Repsol Group (excluding Gas Natural Fenosa) had liquidity of close to 9 billion euros, 2.4 times short-term debt maturities. The company’s net financial debt was 13% lower than at the end of 2012, to 3.867 million euros.

In March, Repsol sold treasury shares, amounting to five percent of the company’s stock to Temasek of Singapore for 1.036 billion euros. The agreement reflects the confidence by international investors in Repsol’s growth strategy and increases the company’s attractiveness.

Upstream: Improved earnings and higher output

In the first quarter of 2013, the Upstream unit accounted for more than half of the company’s operating income, contributing 655 million euros, slightly more than the same period of 2012.

Production rose 11.4% from the previous year to 360,300 barrels of oil equivalent per day. The rise is due to the contribution of five of the key projects from the 2012-2016 strategic plan already producing: United States (Mid-Continent), Spain (Lubina and Montanazo), Brazil (Sapinhoб), AROG in Russia and Bolivia (Margarita). Greater activity in Trinidad and Tobago also contributed to production gains.

At the start of 2013, Repsol reached a significant milestone with the start of commercial production at the giant Sapinhoб field in Brazil, which will reach an output of 120,000 barrels of oil equivalent in the first development phase. This project will contribute decisively to the company’s growth goals in coming years.

Also significant is the start of commercial production at the Syskonsyninskoye (SK) field in Russia.

During the quarter the company drilled nine wells, of which seven showed very positive results, including three good quality oil and gas discoveries in Alaska.

Investment in the area during the first quarter of 2013 was 545 million euros, 11% less than the previous year. Project development accounted for 76% of total spending, mainly in United States (36%), Brazil (18%), Venezuela (15%), Trinidad and Tobago (13%) and Bolivia (7%). Exploration investment represented 17% of the total, spent mainly in the US (39%), Norway (15%), Bulgaria (13%), Namibia (10%) and Russia (10%.)

The quarterly earnings are especially positive as they were obtained amidst falling international prices, with a 5.1% fall in Brent and an 8.3% decline in WTI. Conversely, the company’s gas realization prices improved 25.7% compared with a 22.2% rise in the Henry Hub price.

The LNG business posted operating income of 311 million euros in the first quarter of 2013, of which 129 million euros corresponded to the company’s assets in North America--excluded from the February 26 agreement to sell LNG assets to Shell for 6.7 billion euros.


Downstream: More efficiency in the refining system following the investment program

The Downstream unit’s operating income was 173 million euros in the quarter at current cost of supply, an improvement of 113.6% from the first quarter of 2012.

The increased value of stocks generated an additional 246 million euros in profit in the first quarter of last year compared to 2013. Considering this effect, the unit’s earnings calculated under MIFO criteria fell 46.4% to 178 million euros.

The investments made to improve the Cartagena and Bilbao refineries positively affected earnings and made up for lower sales volumes and margins in forecourts.

The expansion of the two refineries, which were fully operational in the first quarter of 2012, resulted in increased production and refining margins which improved 30% from the year-earlier quarter to USD 3.9/barrel.

Utilization rates increased 14.2 percentage points to 79.8% and conversion capacity use rose 14.8 percentage points to 97.8% compared to the year-earlier period due to improved margins.

The chemicals business benefitted from an improved international outlook and higher margins, adding 35 million euros to the unit’s operating income.

Investments in the unit totalled 92 million euros in the quarter, 33% less than the year-earlier period following the completion of the expansion projects at the Cartagena and Bilbao refineries.

Gas Natural Fenosa

The operating income of Gas Natural Fenosa was 250 million euros in the first quarter of 2013, a rise of 1.6% due to higher wholesale gas sales margins and improved results in Latin America. This offset the lower contribution of Union Fenosa Gas and lower earnings of the electricity business in Spain due to the new tax regime.