Repsol Profit Misses Estimates on Libya, Weaker Refining; Shares Retreat

Repsol YPF SA (REP), Spain’s biggest oil company, said fourth-quarter profit fell more than analysts predicted on lower output from Libya and weaker refining.

Net income, adjusted to exclude inventories and one-time items, slid 29 percent from a year earlier to 355 million euros ($478 million), the company said today in Madrid. The mean of 20 analyst estimates was for profit of 380.6 million euros.

Repsol is bolstering exploration to stem declines in production, which slipped 14 percent in the fourth quarter from a year earlier. The company is investing in Brazil’s offshore Santos Basin and has sold off part of its interest in its YPF unit to reduce dependence on mature fields in Argentina.

“The fundamentals of the company remain solid,” Chief Financial Officer Miguel Martinez said on a conference call. “We expect this year to be better than 2011.”

Shares fell 4.8 percent to 19.57 euros, the lowest since Oct. 4. Repsol is down 20 percent in the past year.

Repsol reported a reserve replacement ratio of 131 percent for 2011, indicating it found more oil and gas than it produced in the year. The ratio was 162 percent for the upstream unit and 112 percent for YPF in Argentina. Output in Libya from wells where Repsol has a stake is now at a gross level of about 300,000 barrels of oil equivalent a day, with Repsol’s share at about 50,000 barrels, the company said.

Output to Rise

Repsol’s output was 299,000 barrels a day in 2011. That will rise 12 percent to about 335,000 this year and the exploration program will include as many as 24 wells, the company said in a presentation to investors.

The company has reported discoveries in Brazil and Sierra Leone this year. YPF said this month that its shale oil resources probably hold almost half that of Brazil’s pre-salt reserves, estimated at about 50 billion barrels.

Repsol is exploring in Brazil in a joint venture with China Petrochemical Corp., known as Sinopec, which in 2010 invested $7.1 billion in Repsol’s Brazilian unit. Repsol said today that it’s sticking with longer-term targets for production growth of 4 percent a year.

Lower refining profit margins reduced income by 116 million euros, the company said. Income for the refining unit dropped by 19 percent in the fourth quarter from a year earlier.

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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