Repsol Earnings Miss, Rising Costs Offset Higher Oil Output
(Bloomberg) -- Repsol SA, Spain’s main oil producer, reported second-quarter net income that missed estimates as higher oil output failed to compensate for increasing costs of producing chemicals.
Repsol’s Chief Financial Officer Miguel Martinez San Martín is stepping down to retire and will be replaced by Antonio Lorenzo, the company also announced Thursday. Tomas Garcia Blanco was named head of exploration and production, replacing Luis Cabra who becomes head of technology development, resources and sustainability.
Repsol shares fell as much as 2.7 percent, to their lowest level since June 22, after the company reported its second-quarter results. “Downstream generated a weaker result this quarter, consistent with higher oil prices, and were below expectations,” RBC Capital Markets LLC said in a note.
Adjusted second-quarter net income rose to 549 million euros ($643 million), from 496 million euros a year earlier, according to a regulatory filing Thursday. The median analyst estimate, compiled by Bloomberg, was 576 million euros.
Flush with cash from the sale of its 20 percent stake in Gas Natural SDG SA -- now known as Naturgy -- earlier this year, Repsol is already seeking to diversify away from oil production. In June it announced the acquisition of power assets from Viesgo for about 750 million euros, in line with a trend among European oil companies seeking to develop a foothold in the electricity industry.
Earlier this week, Repsol also said it was buying a 40 percent stake in lubricant maker Bardahl in Mexico, where it is also building a network of gasoline stations.
With U.S. oil trading at over $50 per barrel since October, following a three-year slump, Repsol is projecting a 19 percent increase in earnings before interest, taxes, depreciation and amortization between 2017 and 2020, the company said in June. Sustained oil prices above $50 per barrel will also increase dividend payments and ramp up Repsol’s spending to diversify away from oil production, the company said.
The company’s refining margin rose to $7.20 per barrel in the second quarter, from $6.60 per barrel a year ago, even as crude prices rose 14 percent during the three months through June. However, overall the downstream unit was impacted by higher costs for chemical production.
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