Repsol clinches deal to offload 25% of upstream business
US institutional investor EIG has struck a deal to purchase 25% equity interest in Repsol's upstream division, in an agreement worth $4.8bn that values Repsol's upstream assets at $19bn.
Repsol said September 7 the deal also provided for a potential listing of the upstream business in the US from 2026 onwards, subject to "favourable market conditions".
The upstream unit will remain operationally controlled by Repsol, which plans to consolidate it within Repsol Group, catalysing efforts to rationalise its upstream exposure so that it can pour resources longer-term into renewable investments.
News that EIG had submitted an unsolicited offer for the 25% stake first emerged June 7. Repsol forecasts that during the 2021-25 period it will spend around €1.6bn/yr on oil and gas production, down from €2.4bn in 2019.
The portfolio is highly gas weighted, in a 70-30 reserves split with crude oil across Repsol's assets in North America, Bolivia, Columbia, Venezuela, Trinidad and Tobago, Brazil and Libya.
Upstream markets exited or downscaled by Repsol in a bid to make efficiencies include Russia, where it sold off the last of its stakes to Gazprom Neft in January, as well as Malaysia and Vietnam. On September 6, Reuters reported the Spanish major had agreed to sell 95,000 net acres of oil and gas assets in Alberta to Teine Energy for C$400mn.
With EIG's involvement, Repsol proposes to target upstream growth in key "regional hubs" focused around OECD economies.
Repsol CEO Josu Jon Imaz highlighted the deal's scope for Repsol to pursue clean energy objectives, without abandoning invested in positions upstream. "Our ambition is to lead the energy transition," Imaz said. "This pioneering agreement allows us to maintain the strategic direction of the upstream unit and, at the same time, to boost the transformation of the company and its multi-energy profile to achieve zero net emissions by 2050."