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Repsol swings to loss in 2019
SPAIN
Repsol booked a $5.3bn charge on climate pledges.
SPAIN’S Repsol sunk into the red in 2019 as a result of weaker oil and gas prices and charges, mainly relating to its December pledge to cut emissions drastically.
Its net loss for the year was €3.82bn ($4.12bn), according to results published on February 20, compared with a net profit of €2.3bn in 2018. Adjusted net income came to €2.04bn, down 13.2% year on year.
Repsol was hailed as a frontrunner among oil companies in addressing climate change when it set out a plan for reducing its net emissions to zero by 2050. But to account for this goal it also booked a post-tax impair- ment of €4.8bn ($5.3bn), although it said this would not affect shareholder remuner- ation. In addition to this charge, it also set aside €837mn to cover costs that might arise from a legal dispute with China’s Sinopec relating to their North Sea venture.
Like oil majors across the world, Repsol was also hurt by lower prices, soft oil and gas demand and weak refining margins, causing its revenues to shrink by 1.4% y/y to €49bn.
Repsol’s adjusted net income from upstream operations was down 20.7% at €1.05bn. Low gas prices were a key source of pressure, with aver- age prices dropping 14.7% to $102.5 per 1,000 cubic metres. The company’s output was also flat, averaging 708,000 barrels of oil equivalent per day versus 715,000 boepd during the previous year. Production was higher towards the end of the year, averaging 730,000 boepd in the fourth quarter.
“Repsol has prioritised the generation of value over production, focusing its efforts on improving efficiency, lowering the cash breake- ven and optimising the portfolio,” it said.
Downstream, Repsol’s income slid 8% to €1.46bn, as refining margins in Spain tumbled 25% to $5 per barrel. Throughput also dropped 5.6% to 44mn tonnes (884,000 barrels per day). The company also suffered €464mn in corporate losses.
Despite its weaker performance, Repsol still managed to raise operating cash flow by 8% in 2019 to €5,84bn, enabling it to continue its share buyback programme and pay dividends. ™
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