Repsol Net Beats Estimates as New Output Counters Libya Halt

Repsol SA (REP)’s second-quarter profit beat analyst estimates as bigger refining margins and output from new wells helped Spain’s largest oil producer counter stoppages due to rebel hostilities in Libya.

Adjusted net income was 390 million euros ($524 million) compared with 401 million euros a year earlier, the company said today in a statement. That beat the 299 million-euro mean estimate of 16 analysts surveyed by Bloomberg. Earnings before interest, taxes depreciation and amortization rose to 1 billion euros from 872 million a year earlier.

With operations spreading from Russia and Iraq to Venezuela, the oil producer with a $10 billion acquisition budget is seeking a target in a developed economy with a strong outlook for commercial production and growth. It’s counting on payment received from Argentina in May for the nationalization of YPF SA in 2012 to help fund a takeover. Chairman Antonio Brufau has said Repsol may sell its 30 percent stake in Gas Natural SDG SA (GAS) to help finance an acquisition.

The shares gained as much as 1.8 percent to 18.75 euros and traded at 18.615 euros as of 9:25 a.m. in Madrid.

Refining margins jumped to $3.1 a barrel in the second quarter from $2.6 a year ago, Repsol said in the statement. Net debt dropped to 2.4 billion euros in the quarter from 6.3 billion euros, aided by payments for YPF.

Talisman Bid

Repsol is considering a bid for Calgary, Canada-based Talisman Energy Inc., people familiar with the matter said this week. The Spanish company is working with JPMorgan Chase & Co. as it evaluates the deal, according to the people. Talisman said yesterday it had been approached by Repsol about “various transactions.”

The company wasn’t pumping any oil in Libya and the situation is eroding profit, Brufau said on June 18. In the first quarter of 2013, the North African region accounted for about 12 percent of Repsol’s production. Libya is the only North African country where the company has operations, according to its website.

Output dropped 6 percent to 338,000 barrels of oil equivalent a day from a year earlier, driven by the lack of production in Libya, Repsol said, adding it restarted production in the country this month. Outside Libya, production increased 5 percent, the company said.

To contact the reporter on this story: Rodrigo Orihuela in Madrid at rorihuela@bloomberg.net

To contact the editors responsible for this story: Alex Devine at adevine3@bloomberg.net; Kenneth Wong at kwong11@bloomberg.net; Will Kennedy at wkennedy3@bloomberg.net Indranil Ghosh

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