Repsol Profit Beats Estimates on Latin America Output Growth

Repsol SA, the Spanish oil company looking to spend about $10 billion on takeovers, reported first-quarter profit that exceeded analyst estimates as production growth in Latin America offset declines in Libya.

Adjusted net income climbed 1.5 percent to 532 million euros ($740 million) from a year earlier, Spain’s largest oil producer said today. That beat the 448 million-euro average estimate of 13 analysts surveyed by Bloomberg. The shares rose the most in four months.

Repsol yesterday said it sold a 12 percent stake in YPF SA for $1.26 billion, marking a final break with Argentina’s leading oil producer two years after the government nationalized YPF, taking control of 51 percent held by Repsol. The proceeds along with a $5 billion compensation package agreed on with the government will help the company pay for acquisitions as it seeks to boost growth.

Net income rose 27 percent to 807 million euros on a one-time gain from the sale of LNG assets to Royal Dutch Shell Plc. The refining margin was $3.90 a barrel, unchanged from a year ago. Repsol shares rose 2.2 percent to close at 19.80 euros in Madrid.

Repsol announced April 30 that Josu Jon Imaz would become chief executive officer, replacing Antonio Brufau, who continues as chairman, with the aim of driving the expansion process.

Too ‘Conservative’

Brufau said Nov. 22 that the company is willing to spend $10 billion acquiring assets in Canada, the U.S. or northern Europe as it plans to sell its 30 percent stake in Gas Natural SDG SA. It has yet to announce an acquisition.

The producer may have failed to find assets to buy so far because it may be too “conservative” in its approach, Chief Financial Officer Miguel Martinez said in an investor conference call today. Repsol is looking for companies that offer space to develop assets for further growth in countries that are part of the 34-member Organization for Economic Cooperation and Development, Martinez said.

Acquisitions don’t depend on Repsol selling Argentine bonds issued to ensure the compensation, Martinez said. While the company will “probably” sell the bonds, which have a nominal value of $5.3 billion, within the next year, it’s in no hurry to dispose of them, he said. Repsol announced today that it received the payment.

In Libya, where fields have been shut amid political unrest, “oil production is zero,” Martinez said. “It is quite difficult to assess any output in Libya today.”

Shell, Europe’s largest oil company by market value, beat analyst estimates last week on the back of higher earnings from natural gas sales, as did Statoil ASA. Total SA missed analyst expectations as refining margins shrank and production dropped.

(An earlier version of this story was corrected because the original net income figure published was wrong.)

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