Spanish Repsol sees strategic gains in Q1 business
Spanish integrated energy company Repsol reported April 29 a Q1 2021 adjusted net income of €471 ($571)mn, up 5.4% year-on-year, with the upstream and chemicals divisions performing well. Like its European peers BP and Shell, it cut its net debt in the quarter and it is now 5% less than it was at year-end, at $6.452bn.
Net income was €648mn while in Q1 2020 it lost €487mn, including €790mn of impairments.
It said the launch of the company's 2021–2025 strategic plan and the measures implemented against the pandemic led to a positive cash flow in all business units and a net debt reduction of €326mn
Exploration and production posted earnings of €327mn, "far more than the €90mn earned in the same period last year. With a focus on efficiency, optimisation of operations, and the cost reductions that have been implemented, the business was able to take advantage of the rise in average hydrocarbon prices as compared to the first three months of 2020: a 22% spike for the Brent and 35% for the Henry Hub [US gas price]," it said.
Crude rose 23.4% while natural gas climbed 41.7% in price over the quarter. And the business unit continued advancing in its decarbonisation strategy that will lead to a 75% cut in emissions of CO2e/barrel by 2025.
Average production rose to 638,000 barrels of oil equivalent (boe)/day, in line with the figures projected in the new strategic plan and slightly higher than the previous quarter. In exploration, the successes of 2020 continued in 2021 with a discovery in the Boicobo Sur-X-1ST well in Bolivia, where the volume of hydrocarbons found totaled around 1 trillion ft³ of reserves and prospective resources. "This noteworthy performance in exploration is especially significant considering the cost reductions being carried out by the company in this activity, amounting to a 49% reduction as compared to the first quarter of 2020," it said.
In relation to the arbitration process with Sinopec for the purchase of 49% of Talisman Energy UK in 2012, in April a new partial award was announced whereby the tribunal rejected three of Sinopec's four claims. This is positive for Repsol, as it is considered to reduce the risk estimate initially recorded by the company, it said.
The industrial business posted earnings of €73mn, a quarter of last year's €288mn and refining also suffered, but its chemicals and wholesale gas and trading divisions did well despite the adverse circumstances.
It said its determination to decarbonise while contributing to economic recovery had led to "progress in the transformation of its industrial facilities into multi-energy hubs capable of manufacturing products with a low, zero, or even negative carbon footprint."