Repsol’s net income reach €2.3 billion in 2018

Repsol's net income

Repsol overcame the market’s expectations with its 2018 results, thanks to a rise in production and higher oil and gas prices.

The Spanish oil company reported a 7.5 percent increase of its net adjusted results in 4Q 2018.

The firm launched new projects in Algeria, Trinidad and Tobago, United Kingdom, Peru, and Malaysia in 2018. Also, it benefitted from year-on-year price growth in October-December and lower exploration costs.

According to Repsol, it is on path to meeting the strategic goals set in its 2018-2020 Plan. This strategy includes investing up to €15 billion, with 45 percent earmarked for refining (Downstream), as well as renewable projects and reducing its debt.

In May 2018, Repsol sold its 20 percent share in Naturgy Energy Group SA for €3.8 billion, which gave rise to a capital gain of €344 million.

Increased net income

In a context marked by the recovery and fluctuation of oil prices, the company’s net results stood at €2.3 billion, up by 10 percent from 2017. On the other hand, free cash flow reached €5 billion, up by 98 percent from the previous year.

In addition, the company reduced its debt to €3.4 billion, down by 45 percent from 2017; when its debt amounted to €6.2 billion.

In view of this, earnings per share stood at €1.45, up by 12 percent from 2017.

The adjusted net benefit was €632 million in October-December, increasing from the €588 million posted last year. The company’s forecast, based on analysts’ estimates, was €601 million.

The price of the Brent barrel currently stands at $66, far from last year’s highs. Even so, it is more than the $50 estimated by Repsol.

The crude oil realization price was $60.4 in 4Q, compared with last year’s $56.6. For their part, gas prices also went up.

Energy transition projects

One of the three pillars of the company’s Strategic Plan is developing new businesses connected to the energy transition. To this end, it has paid special attention to developing its gas business. It is also focusing on emissions reduction and gas and electricity distribution.

In line with these premises, in 2018 Repsol is showing significant results. For instance, it completed the purchase of Viesgo’s non-regulated low-emission power generation business and its gas and electricity distributor (750,000 customers).

Additionally, Repsol began operating in the power generation sector, as well as the electricity and gas distribution sector in Spain. It did this through its new brand: Repsol Electricidad y Gas.

The company also acquired Valdesolar Hive, S.L, the firm in charge of the 264-MW solar PV project in Valdecaballeros (Bajadoz). This facility is set to be operational between 2019 and 2020.

International presence in Downstream businesses

Repsol has also posted significant results after increasing its international presence in Downstream businesses in 2018. For instance, the company inaugurated its first service stations in Mexico. Furthermore, it is entering the lubricant business, with the acquisition of a share in Bardahl de México, S.A.

On the other hand, it also acquired Peruvian Puma Energy Perú SAC. With this move, the company adds 23 new service stations in the country, for a total of 560.

Improved results thanks to new discoveries in 2018

In 2018, the company’s Upstream business stood out thanks to four new exploration discoveries in Colombia in 2018.

Another highlight was the significant results seen in the appraisal well drilled in Russia.

Equally important is the company’s production increase, which was possible thanks to projects such as Reggane (Algeria), Juniper and TROC (Trinidad and Tobago); Monarb (United Kingdom), Kinabalu (Malaysia) and Sagari (Peru). Other projects include the Visund field (Norway), new wells in Marcellus (USA), and greater supply from Libya.

Similarly, other areas that stand out are the early development stages of the Buckskin project in the U.S., the approval to begin Phase 1 of the Akacias Development Project in Colombia, in order to increase production, and the acquisition of exploratory blocks in Mexico, Brazil, Norway, Alaska, Indonesia, Greece, and Bulgaria.

For more information, check Energía16

See also: Iberdrola reports net profits of over €3 billion

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