Repsol Profit Drops More Than Expected on Libya, Refining

Repsol SA, the largest Spanish oil producer, reported a larger-than-expected drop in third-quarter profit on disruption in Libya and shrinking refining margins.

Adjusted net income fell 47 percent to 354 million euros ($474 million) from 671 million euros a year earlier, the company said in a statement. That was short of the 390 million-euro average of 18 analyst estimates compiled by Bloomberg.

Lower sales, mostly of liquids from Libya, cut earnings by 118 million euros. Exports have been crippled by labor disputes at oil terminals since the 2011 civil war that ended the rule of Muammar Qaddafi. Refining margins shrank to less than half.

“The company’s businesses have performed well despite the negative effect of economic weakness in Europe on refining margins and the temporary production shutdowns in Libya,” Madrid-based Repsol said in the statement. “In this context, Repsol has continued to add production and resources.”

It aims to bolster output with new projects after Argentina seized its YPF SA unit, one of its largest assets, last year.

While Respol rose 25 percent this year in Madrid trading, the stock is still 19 percent lower than at end-2011. It fell the most since June today, dropping 3 percent to 19.17 euros.

Output was 344,000 barrels of oil equivalent a day in the quarter, up 1.5 percent from a year earlier, and down from 359,000 barrels in the second quarter.

Profit for the refining unit slid 53 percent to 143 million euros. Refining margins shrank to $2.60 a barrel from $6.40. Upstream unit profit fell 47 percent to 400 million euros.

Repsol in June rejected an Argentine offer of compensation for its expropriated unit including stakes in the Vaca Muerta shale deposit. The producer filed lawsuits against companies including Chevron Corp. and Bridas Group after they agreed to invest in YPF projects Repsol says were illegally confiscated.

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