Spain’s Repsol energy firm to sell assets, cut spending

They rose 3 percent in early trading on Thursday after losing 27 percent over the last three months and 20 percent year to date.

MADRID-Repsol SA on Wednesday said net profit will fall to between 1.25 billion euros ($1.42 billion) and €1.5 billion in all of this year from €1.61 billion a year earlier, reflecting lower oil prices and tighter refining margins. The company said dividend payment will be possible through the entire period covered by the strategic plan, even if crude prices remain at $50 per barrel. An additional $2.4 billion (€2.1 billion) are expected to be realized through synergies in 2018, as the company continues to integrate the Talisman purchase.

The sell-off will help cut spending by 38 percent, and half the divestment will occur in the next two years, according to a statement announcing Repsol’s 2016-2020 strategic plan.

Echoing similar moves from European competitors, Repsol said it would step up asset sales, trim E&P investments and cut costs in order to generate more cash, pay back debt and maintain its 1-euro-per-share dividend.

“The company’s increased size and improved makeup, following the achievement of the 2012-2016 strategic plan’s goals and the transformative integration of Talisman, allow Repsol to extract value from that growth to increase efficiency and resilience and take advantage of the opportunities that arise from the energy environment”, it said.

The firm previously saw its 2015 EBITDA at between 5 billion and 5.5 billion euros, or an increase of up to 45 percent from 2014.

Its net profit cleaned of inventory effects is seen at between 1.6 billion and 1.8 billion euros, down from 1.7 billion euros in 2014.

Barclays analysts estimate the deal, combined with an agreement to delay planned drilling in coming months, might lower Repsol’s capital expenditures by close to €1.5 billion.

Repsol targets a CCS EBITDA of 7.9 billion euros by 2020.