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GAS

Repsol closes Shell gas deal to ease debt

Spanish energy group Repsol said on Tuesday it had sold its liquefied natural gas (LNG) assets to Shell for €5.1 billion ($6.65 billion) in cash and debt.

Repsol closes Shell gas deal to ease debt
Repsol President Antonio Brufau (left) with Shell CEO Peter Voser after signing their agreement in Madrid on February 26, 2013. Photo:HO/REPSOL/AFP

"The agreement, which generates approximately $3.5 billion (€2.7 billion) pre-tax capital gain for Repsol, includes the assets in Trinidad & Tobago (Atlantic LNG), Peru LNG and Bahia de Bizkaia Electricidad (BBE) as well as the LNG sale contracts and time charters," the company said in a statement.

Repsol said it is keeping its LNG assets in Canada, and had signed a supply agreement with Shell, as the current low gas prices in North America would not allow it to earn a return on the Canaport regasification terminal.

The Madrid-based oil giant said the transaction, which it expects to sign off on before the end of the year, will mean that it surpasses the €4.5 billion in divestments outlined in the 2012–2016 strategic plan.

"The deal strengthens the company's balance sheet and financial position, advancing the goal of reinforcing its credit ratings, and reduces Repsol's net debt by more than half to €2.2 billion, excluding Gas Natural Fenosa," added the company.

It said the funds obtained from the deal will allow it to boost its upstream organic growth strategy and build upon its exploratory successes.

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ENERGY

Spanish oil giant Repsol swings back to profit

Spain's oil giant Repsol said on Thursday that it swung back to profit in the third quarter as the company reduced costs to adapt to a slump in oil prices which has hit production revenues.

Spanish oil giant Repsol swings back to profit

The company posted a net profit of €481 million ($$535 million) in the July-September period, compared to a net loss of 221 million euros in the same year-ago period.

The result was higher than forecast by analysts polled by Factset who predicted the company would table a net profit of €308 million.

“The efficiency and savings measures implemented by Repsol throughout the year improved earnings and bolstered the company's resilience to the current environment of depressed crude oil and gas prices,” the company said in a statement.

Repsol in October 2015 unveiled an ambitious cost-cutting programme outlined in October 2015 which involves slashing billions from capital spending by 2020 and slashing 1,500 jobs by 2018.

The company said lower spending on exploration helped it to drastically reduce its loss in its upstream operations to €28 million from €395 million in the third quarter of 2015 despite the slump in oil and gas prices.

In its downstream operations, which includes refining, earnings fell 42 percent in the third quarter to 395 million euros from a year earlier due to lower margins, the company said.

During the first nine months of the year Repol's posted a net profit of €1.12 billion, a 35 percent increase over the same time last year.

Oil prices have recovered to around $50 a barrel since producers cartel OPEC agreed at the end of September to cap output in a bid to tackle an oversupply that has hammered prices.

Nevertheless, crude prices are still only about half their mid-2014 levels.

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