Enap Profits Fall 28% in Jan-Sep. on Weaker Peso

Chile's state oil company Enap posted profits of 90bn pesos (US$145mn) in the first nine months of 2004, down 28.5% in US dollar terms on the same period last year due to non-operating losses as a result of the depreciation of the peso against the greenback, the company said in a statement Tuesday.

In dollar terms, the company's operating profits increased 7.1% to US$238mn from the same period in 2003. The improvement was due to higher oil prices and refining margins, and greater market share in the gasoline and diesel distribution business, Enap's CEO Enrique Dávila told reporters on Tuesday.

Sales increased to US$3.1bn compared to US$2.5bn in the same period of 2003 due to the higher prices. "The price has a positive impact on exploration and production, but also production costs were lower than our expectations mainly in the Magallanes area," Dávila said.

Enap's refining unit Enap Refinerías launched a new cleaner fuel called Ciudad Plus in July, which has helped increase its gasoline market share to 82% compared to its projected share of 70%, Dávila said. Enap's refining margin rose to an average of US$7.35/b in the nine-month period, and domestic demand increased 2.5% more than the company had forecast, Dávila said.

Ebitda in the first nine months increased 20.6% to US$398mn, reflecting the company's strong cash flow generation, the statement said.

Some 55% of the Ebitda came from Enap's refining, logistics and commercialization business unit and the remaining 45% came from its exploration and production business in Chile and abroad.

Non-operating losses in the first nine months were US$27.3mn, compared to profits of US$25.6mn in the same period of 2003, due to the exchange rate difference which had a positive impact of only US$14mn in the nine-month period compared to US$90mn in 2003.

The company's total debt increased to US$1.17bn at the end of September 2004 compared to US$931mn at the same time in 2003 thanks to financial restructuring including the issue of US$150mn bonds in March this year and a US$150mn international syndicated loan completed in August. Some 91.9% of Enap's US$967mn financial debt is long-term.


Enap aims to finalize its partnership with a foreign company to invest in a 300MW geothermal project in Chile by the end of November and begin work in early 2005, Dávila said.

According to a previous BNamericas report, Italian power company Enel's Latin American subsidiary is considering partnering with Enap on the project. By law Enap can only have a 49% stake in the project, which means a private company must come in as operator.


Enap executives traveled to Europe in October to promote the company's proposed US$400mn-500mn liquefied natural gas (LNG) re-gasification project and met with potential LNG suppliers. Enap aims to pre-qualify companies interested in supplying LNG to the plant by the end of this year and then hold a tender in 2005.

Operations could start in 2007-2008. Enap has hired Linklaters as legal advisor on the project and Citigroup Global Markets as the investment bank.


Enap's international arm Sipetrol has drilled its first well in Egypt and by 1Q05 it should know the reserves and projected production in its fields in Egypt's western desert basin, Dávila said.

The block is being explored by a consortium of Sipetrol (50% and operator), IPR of the US (30%) and Croatia's INA (20%). In addition, Sipetrol is participating in a tender in Libya, with bids to be received in December and blocks to be awarded in February-March, Dávila said.

Sipetrol also participates in exploration and production projects in Iran, Yemen, Argentina and Ecuador.

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