July 25 (Bloomberg) -- Repsol SA, Spain’s largest oil producer, reported an increase in second-quarter earnings on production gains as new projects started up.
CCS net income rose to 423 million euros ($559 million) from 406 million euros a year earlier, the Madrid-based company said today in a statement. That fell short of the 431 million-euro average estimate of 17 analysts surveyed by Bloomberg.
Repsol, which has ramped up exploration efforts in Latin America and North America to offset the loss of its Argentine YPF SA unit, said output rose 12 percent from a year earlier. It cited project startups in Russia and the U.S., as well as reduced maintenance shutdowns in Trinidad and Tobago.
The company reiterated a 10 percent production goal for the year in a presentation to investors, and said it discovered 300 million barrels of oil equivalent in the first half.
“Repsol’s volume growth was driven by the startup of five of the company’s 10 key upstream projects,” said Oswald Clint, a London-based analyst at Sanford C. Bernstein & Co.
Refining profit slipped 32 percent to 138 million euros because of lower margins and a deterioration in differentials between light and heavy crudes. The refining margin fell to $2.6 a barrel from $4.7 a barrel a year earlier.
“The miss was due to a higher than expected tax rate of 45 percent as well as lower than expected income from associates,” said Peter Hutton, an analyst at RBC Capital Markets in London.
The shares were 0.4 percent lower at 17.27 euros as of 2:41 p.m. in Madrid trading. The stock is up 13 percent so far this year.
Repsol, which has demanded compensation for its expropriated Argentinian unit, rejected an offer by the Argentine government in June that included stakes in the Vaca Muerta as compensation. The deal was discussed through YPF and Pemex Corp. representatives, with no direct contact with the Argentine government, Chief Financial Officer Miguel Martinez said on a conference call with analysts today.
“We need fair compensation, which is something that after 15 months we haven’t seen,” Martinez said. “We are looking for liquid assets, rather than future investments in Argentina.”
The Spanish driller has filed lawsuits against companies such as Chevron Corp. and Bridas Group holdings, for engaging in what Repsol called “unlawful competition,” by seeking to benefit from assets it says were illegally confiscated.
Repsol’s liquefied natural gas division, most of which it sold to Royal Dutch Shell Plc in February for $4.4 billion, reported profit more than doubled to 170 million euros on improved volumes and margins.
The transaction, due to be completed in the fourth quarter, is “taking time” because more than 100 contracts need to be transferred, Martinez said.
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