Galp to Invest 1.2 Billion Euros a Year, Grow in Exploration

Galp Energia SGPS SA (GALP), Portugal’s biggest oil company, plans to invest 1.2 billion euros ($1.6 billion) a year from 2013 to 2016 as it expands exploration.

It will invest 1 billion euros to 1.2 billion euros this year, with exploration and production representing about 60 percent, the Lisbon-based company said in a statement today.

“Galp will intensify exploration activities, de-risking its portfolio, and will keep developing high-rewarding projects,” the company said.

It’s expanding exploration in regions such as Brazil’s offshore Santos Basin, where its Lula project is located, and Angola to improve access to crude supplies and curb dependence on refining and sales of fuel in Portugal and Spain.

Galp forecast earnings before interest, taxes, depreciation and amortization of 900 million euros to 1.1 billion euros for 2012. It estimates Ebitda will rise at a compound annual growth rate of about 25 percent from 2011 to 2016 as it develops the Lula and Cernambi fields in Brazil. The company’s reserves increased 24 percent to 709 million barrels of oil equivalent last year, including appraisal activities in Brazil.

Galp on July 29 raised its 2020 output target in light of “exceptional” progress in Brazil and expects working interest production of more than 300,000 barrels of oil equivalent a day by the end of the decade. It reaffirmed that target today. It sees 20 percent average dividend growth a year for 2012 to 2016.

The shares gained 11 percent this year, valuing the company at 10.5 billion euros. Eni SpA (ENI), Italy’s biggest oil company, and Portuguese holding company Amorim Energia BV each control a third of Galp. Eni is ready to sell its 33 percent holding in Galp, Chief Executive Officer Paolo Scaroni said Feb. 15.

To contact the reporter on this story: Joao Lima in Lisbon at jlima1@bloomberg.net

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

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