Repsol SA (REP) is willing to spend as much as $10 billion acquiring assets in Canada, the U.S. or northern Europe as it plans to sell its $7 billion stake in Gas Natural SDG SA (GAS), Chairman Antonio Brufau said.
Spain’s largest oil producer is considering buying unconventional oil and gas assets in North America with the eventual proceeds, and it may make two or three smaller acquisitions rather than one large one, he said in an interview. Brufau said he’s not interested in oil sands.
Repsol, whose debt is rated one step above junk at the three main rating companies, could borrow to top up the proceeds from its 30 percent Gas Natural stake or buy a company that has debt with an enterprise value of as much as $10 billion, Brufau said.
“The target has to add value in terms of portfolio, risk, profitability and technology,” Brufau, 65, said yesterday in his office at the company’s headquarters in Madrid. “If we sell Gas Natural, it’s to grow.”
The company, a producer in Angola, Libya and Bolivia, is seeking to rebalance in favor of developed countries with legal stability, after its Argentine unit YPF was confiscated in 2012, Brufau said. Shares in Repsol, which faces public criticism from Petroleos Mexicanos, one of its biggest shareholders, have recovered their losses since the Argentine government took YPF without compensation.
The stock fell 3 cents to 18.495 euros a share in Madrid as of 9:03 a.m. It has gained 20 percent this year, beating the 4.2 percent gain of the 22-member Bloomberg Industries Integrated Oils index.
The company has said it’s considering disposing of the stake in Gas Natural, Spain’s largest gas utility, because Repsol’s sale of liquefied natural gas assets to Royal Dutch Shell Plc (RDSA) this year removed any strategic reason to own those shares. Repsol won’t sell to return cash to shareholders, Brufau said.
Brufau reiterated that the company, which has axed YPF from its name while not writing down its value on its books, is willing to reach a settlement with the government of President Cristina Fernandez. Still, Repsol’s investors would not accept a deal that meant reinvesting in Argentina, he said.
“We’re ready to discuss fair and real value,” he said. “It’s better to have cash today than a long term pledge.”
Repsol in June rejected an Argentine offer of compensation for its seized unit, including stakes in the Vaca Muerta shale deposit, and has filed a claim against Argentina at the arbitration arm of the World Bank.
The producer has also filed lawsuits against companies including Chevron Corp. (CVX) after they agreed to invest in YPF projects Repsol says were illegally confiscated.
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