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Repsol Profit Up 38% on Higher Output, Refining Margins

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Spanish oil company Repsol SA said Thursday its first-quarter profit rose 38% on the year, mainly due to higher production and refining margins.

Repsol said its CCS net income, a figure that excludes gains or losses in the value of inventories and is therefore equivalent to the net profit figure reported by U.S. oil companies, increased to 634 million euros ($833.9 million) from EUR458 million in the same period a year earlier, excluding nationalized Argentine unit YPF SA.

Excluding one-off gains and losses from things like asset sales, the company's CCS adjusted net income climbed 47% to EUR676 million, above the average of seven analysts' forecasts of EUR545.1 million, according to FactSet.

Group revenues rose 3% to EUR15.51 billion.

Diluted earnings per share were EUR0.51, compared with EUR0.65 in the first quarter of 2012, as an increase in shares in 2012 and 2013 weighs on that figure.

Oil and gas production growth coming from Brazil, Russia and other countries helped supercharge Repsol's results. Output in Libya, stopped during the country's civil war in 2011, has since returned to pre-war levels.

Repsol said production of oil and gas in the first quarter rose 11% from a year earlier, to 360,000 barrels of oil equivalent a day.

Better margins at its refining operations, mostly in Spain, also boosted earnings, Repsol said. The company recently upgraded two large refineries in Spain, helping its average margin per barrel to grow to $3.9 in the first quarter from $3 in the same quarter last year.

After Argentina in early May 2012 nationalized 51% of the company's controlling stake in YPF--the country's leading oil and gas company--Repsol eventually ended up with a 12% stake in YPF.

Since the nationalization, Repsol has sought to protect its investment-grade credit rating by cutting its dividend payout ratio and committing to slashing its debt.

In late February, the company agreed to sell some of its liquefied natural gas assets to Royal Dutch Shell PLC for $4.4 billion in cash. The deal, when it closes by 2014, should help cut its debt roughly in half to EUR 2.2 billion, excluding debt it consolidates from a 30% stake in Gas Natural SDG SA.

Repsol shares closed Wednesday at EUR18.20, valuing the company at EUR23.34 billion.

Copyright (c) 2012 Dow Jones & Company, Inc.

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