Repsol profits retreat after YPF takeover

by on July 26, 2012 8:02 am BST

Repsol’s net income for the first six months of the year totaled just over €1 billion ($1.2 billion), which was down 22.9% on the more than €1.3 billion booked during the first half of 2011.

The company noted that its profit and loss statement for the first half of the year reflected a net loss of €38 million based on the value of the shares in YPF subject to expropriation, the market value of the shares still held by Repsol and accounting for the load made to Petersen Group to purchase a stake in YPF.

The Argentine government seized control of 51% of YPF in April this year citing failure of investment from Repsol.

The Spanish company has since launched legal action claiming the government violated the treaty for reciprocal protection on investments between Spain and Argentina.

It also claims the government failed to comply with the obligation to launch a takeover bid for all of the shares in YPF before taking control of the company.

Excluding YPF from the results, net income was still down 14.6% compared to a year earlier at €903 million which the company attributed to a decline in the value of inventories which it holds as part of Spain’s strategic reserve.

This was partially offset by stronger performance from the company’s upstream unit during the first half of the year which saw operating income rise 41.9% to €1.1 billion.

The increase was mainly due to higher production which totaled 321,665 barrels of oil equivalent per day, a 3.8% increase compared to the first half of 2011.

Helping lift output was higher production from Repsol’s operations in Libya, where output had returned to pre-war levels, and the start-up of the Margarita gas field in Bolivia.

This helped offset a fall in production in Trinidad & Tobago due to maintenance work and a scheduled shutdown to improve facilities.

Higher commodity prices compared to the same period a year ago also helped lift the result from the upstream unit with an increase in Repsol’s gas realisation price by 12.1% due to the start-up of new assets in Bolivia.

The company also noted an 8% rise in its crude realisation price during the period, beating the international benchmark prices which saw Brent prices only rise 2.3% while West Texas Intermediate fell 0.3%, according to the company.

Repsol invested 40.6% more money in its upstream unit during the first half of the year compared to a year ago, with total investment topping €1.1 billion for the six months to 30 June.

Earlier this year Repsol unveiled its five-year strategic plan, which will see the upstream segment receive almost 80% of the €19.1 billion earmarked for investment up to 2016.

The development plan focuses on 10 key projects with the aim of increasing production at an annual rate of 7% to reach its output target of 500,000 boepd by 2016.