MOSCOW (MRC) -- Repsol SA said its adjusted profit tripled in the fourth quarter as the Spanish company was sheltered from the oil price plunge by higher refining margins and falling financing costs, said the Wall Street Journal.
Repsol said adjusted profit, which excludes gains or losses in the value of inventories and one-off items, rose to EUR370 million (USD420 million) between October and December compared with EUR123 million a year earlier.
Repsol, whose origins lie in refining, spent USD4 billion in recent years modernizing two of its five refineries in Spain, allowing it to produce more refined products and operate at a profit when crude oil was selling above USD100 per barrel. When oil prices went into free fall in recent months, Repsol’s refining margins widened sharply, injecting a further boost.
For the full year, Repsol’s adjusted profit rose 27% to EUR1.71 billion. Oil prices fell 48% over the course of last year, mostly during the second half of the year.
Including inventories and one-offs, Repsol reported a net loss of EUR34 million, compared with a net loss of EUR1.09 billion in the fourth quarter of 2013. Sliding oil prices in the quarter led Repsol to lower its valuation of its oil inventory by EUR489 million.
The large loss in the year earlier was mainly a result of charges related to the Argentine government’s expropriation of Repsol’s unit YPF SA. Repsol received USD5 billion in compensation from Argentina for the nationalization last year.
Repsol lowered its net debt by 64% on the year, pushing down the company’s financing costs. Net debt fell as a result of the sale of Repsol’s liquefied natural gas assets to Shell, and compensation it received last year from Argentina.
Repsol had a debt of EUR1.94 billion at the end of the quarter, and it held a cash position of EUR9.84 billion.
The bulk of this cash will go into the EUR8.3 billion takeover of Talisman Energy Inc., announced by Repsol in December as oil prices were in free fall. The closing of the deal, expected during the second quarter, will allow Repsol to roughly double in daily oil production.
Repsol S.A is an integrated Spanish oil and gas company with operations in 28 countries. The bulk of its assets are located in Spain.
MRC