Repsol SA wrote down the value of its stake in YPF, the unit seized by Argentina almost two years ago, after Chairman Antonio Brufau said talks over a compensation deal were advancing.
Repsol will take a charge of 1.28 billion euros ($1.75 billion) after tax on 2013 earnings, reducing the value of YPF to $5 billion, it said in a filing to regulators today in Madrid. Spain’s largest oil producer presents results on Feb. 26 and the board meets the day before.
Repsol is close to reaching an agreement with the Argentine government over compensation, which will be in government bonds, two people with knowledge of the process said on Feb. 18, after Brufau said talks were progressing.
Repsol shares, which have recovered the level at which they were trading before the seizure in 2012, were little changed today at 18.01 euros. That values Repsol at 23.9 billion euros.
The YPF stake had been on Repsol’s books at 5.39 billion euros, and today’s provision reduces the value to 3.63 billion euros, or $5 billion.
The proposed compensation deal, an outline of which was agreed in November, is based on $5 billion of 10-year bonds, a person briefed on the matter said at the time. Repsol, which hasn’t disclosed terms of the proposal, originally sought $10.5 billion compensation and sued in international courts.
President Cristina Fernandez de Kirchner’s government seized 51 percent of YPF in April 2012 after saying Repsol hadn’t invested enough. For Argentina, settling the dispute may help attract more companies to develop some of the world’s largest shale fields as the country seeks to reduce energy imports.