Page 9 - Euroil Week 44 2019

EurOil PERFORMANCE EurOil
Repsol Q3 profits slump on low oil prices
SPAIN
“We will prioritise price versus production,” CEO Josu Jon Imaz said.
PROFITS at Spain’s Repsol tumbled 46.7% year on year in the three months ending September 30 as low oil and gas prices took their toll on the company’s upstream business, more than off- setting stronger performance in its chemicals segment.
In results published on October 31, Rep- sol posted a net profit of €333mn for the third quarter, down from €625mn a year earlier. Its adjusted net income slumped to €522mn, from €588mn.
Adjusted net income for Repsol’s upstream segment slumped to €218mn from €368mn as a result of bearish prices. This was despite a 2.9% growth in Repsol’s production to 711,000 barrels of oil equivalent per day (boepd), thanks to the launch of new wells in the Marcellus and Eagle Ford shale formations, as well as in Canada and Colombia.
Downstream adjusted income climbed to €372mn from €336mn, on the back of higher earnings from Repsol’s commercial and chem- icals businesses. This more than countered a cut in refining margins to $5.5 per barrel, from $6.7 a year earlier.
Repsol needs to keep its cash flow strong and its debts low to follow through on plans announced in July to buy back up to 5% of its existing shares. Net debt reached €3.8bn at
the end of September, up €178mn from three months earlier, although cash flow from opera- tions rose 22% y/y to €4.074bn in the first nine months of the year.
“Repsol’s downstream business generates the majority of its cash flow, and we see challenges elsewhereinthebusiness,”RBCCapitalMarkets analyst Biraj Borkhataria wrote in a note. “Our longer-term concerns mainly relate to re-in- vestment risks with free cash flow, with uncer- tainty around both upstream and new energies pipeline.”
Repsol has slashed its forecast for full-year core earnings to €7.5bn from €7.8bn previously, and has cut its output guidance to 710,000 boepd from 720,000 boepd. It aims to produce between 720,000-750,000 boepd in 2020.
“We will prioritise price versus production,” CEO Josu Jon Imaz said in an earnings call.
According to the company head, capital spending should amount to €12.5-13.5bn in 2018-2020, down from €15bn according to an earlier plan. It also intends to buy more assets in countries where it has a larger presence and sell assets in countries where its foothold is small.
“Our geographical scope is not the right one,” Imaz explained. “We have to reduce the scope of the countries where we operate, and become more active in M&A.”™
PROJECTS & COMPANIES
Equinor hits oil, gas off Norway
NORWAY
The find, made in
a mature region,
will probably be hooked up to existing infrastructure.
NORWAY’S Equinor has discovered between 38 and 100mn barrels of oil equivalent at a well in a mature area of the North Sea, with the find likely to be hooked up to existing infrastructure.
The oil and gas discovery was made at the Echino South exploration probe, which was sunk to a depth of 2,947 metres, 3.2 km south- west of Equinor’s Fram field, the company said. The well’s goal was prove petroleum in upper Jurassic and middle Jurassic rock and encoun- tered oil and gas in both levels.
“We are making one of this year’s biggest dis- coveries in the most mature area of the Norwe- gian continent shelf (NCS), not far from the Troll field,” Equinor’s senior vice president for explo- ration in Norway and the UK, Nick Ashton, said. “This demonstrates the opportunities that still exist for value creation and revenue from this industry.”
The Echino South discovery was made at production licence 090, where Equinor serves as operator with a 45% interest. Its partners are
ExxonMobil with 25% and Japan’s Idemitsu Petroleum and the UK’s Neptune Energy with 15% apiece. The find will likely be developed using a tie-up to existing infrastructure.
While the well was not formation tested, extensive amounts of data were acquired, according to Equinor. Work on a sidetrack well is underway.
Once the sidetrack is finished, the discov- ery well will be plugged and abandoned, and the Deepsea Atlantic rig will move to Equinor’s Askeladd North field to carry out production drilling.
The successful result at Echino South follows Equinor’s discovery in September of gas south- west of the Marulk field in the Norwegian Sea. That find was estimated to be 50-88mn boe in size.
Equinor has been steadily expanding its resource base in Norway over recent years. It had around 4.47bn boe in proven oil and gas reserves in Norway at the end of 20™
Week 44 07•November•2019 w w w . N E W S B A S E . c o m P9