MOSCOW (MRC) -- Repsol SA plans to divest EUR6.2 billion in nonstrategic assets and cut spending by 38% “without altering its company profile as part of its 2016-20 strategic plan, said Ogj.
The company says it has identified "new synergies" following its USD8.3-billion acquisition of Talisman Energy Inc. completed earlier this year, enabling it to raise its savings target resulting from the integration to USD350 million from the initially expected USD220 million.
The synergies supplement the efficiency program included in the strategic plan, the company said. The program will be applied to the entire company and will lead to cost savings, including synergies, of EUR2.1 billion/year from 2018.
Following the Talisman deal, Repsol’s exploration and production unit will focus on three strategic regions: North America, Latin America, and Southeast Asia.
The plan includes lower exploration expenses, a 40% reduction in investment levels, and production between 700,000-750,000 boe/d guaranteed by current reserves, allowing the exploration and production business to reduce the free cash flow breakeven price, Repsol says.
The company intends a broader integration of refining and marketing activities, with divestments in nonstrategic assets for the downstream unit. This allows the company to set the downstream unit’s target for free cash flow generation for the next 5 years at an average of EUR1.7 billion/year.
Repsol also noted that its 2015 net profit will drop to EUR1.25-1.5 billion from EUR1.61 billion in 2014 caused by low crude oil prices and refining margins.
As MRC informed earlier, Repsol said it had reached a deal to buy Talisman Energy, Canada's fifth-largest independent oil producer, for USD13 billion.
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