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Repsol Profit +29% On Higher Oil Prices, LNG Unit

Repsol Profit +29% On Higher Oil Prices, LNG Unit
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Πεμ, 12 Μαΐου 2011 - 17:18
Spanish oil firm Repsol YPF SA (REP.MC) Thursday posted a 29% jump in first-quarter net profit, excluding inventory effects, on higher oil prices and a soaring contribution from its liquefied natural gas business.
Spanish oil firm Repsol YPF SA (REP.MC) Thursday posted a 29% jump in first-quarter net profit, excluding inventory effects, on higher oil prices and a soaring contribution from its liquefied natural gas business.

Operating profit rose to EUR1.61 billion from EUR1.54 billion, driven by the operating result of Repsol's LNG unit, which more than tripled on higher volumes and margins, in part due to strong demand from Japan .

Global LNG demand spiked in the first quarter as Japanese utilities like Tokyo Electric Power Co. (9501.TO) and Tohoku Electric Power Co. (9506.TO) boosted thermal power generation after four nuclear plants went offline following the March earthquake and tsunami.

Replacement-cost-adjusted net profit, the figure most closely watched by analysts, rose to EUR654 million from EUR508 million a year earlier. This measure, equivalent to the clean replacement cost of supplies, strips out volatile swings in the value of inventories.

Repsol's unadjusted net profit in the quarter was EUR765 million, up 11.2% from EUR688 million a year earlier, and well above the EUR557.4 million analysts' consensus estimate compiled by Factset.

Repsol's overall oil and gas output dropped 7.4% to 324,000 barrels of oil equivalent a day, mainly due to production stoppages in war-torn Libya .

Just before the conflict started in Libya , Repsol pumped out around 4% of its production from the North African country. The company operates fields there jointly with France 's Total SA (TOT) and Austria 's OMV AG (OMV.VI), as well as Libya 's state-owned oil company.

Higher oil prices offset the loss of Libyan production in the quarter, as Brent prices averaged more than $105 a barrel and WTI prices more than $94 a barrel, from just over $75 in both cases in the same period last year. That resulted in a 13% increase in Repsol's oil realization price.

In addition, Repsol's earnings release comes just two days after its Argentine unit YPF SA (YPF) said it has found at least 150 million barrels of crude oil equivalent in potential shale reserves at the southern province of Neuquen , its biggest oil find in years, raising the company's reserves by 35%.

Still, Repsol's Chief Operating Officer Miguel Martinez said the company doesn't plan to raise its earnings outlook at this point, and noted that the contribution of shale oil and gas reserves--which are expensive to develop--to the company's bottom line is still unclear.

In a note to clients, analysts at BPI said Repsol's earnings may result in upward revisions to consensus estimates. BPI rates the stock at buy, with a EUR24.85 target.

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