Cash flow in 2005 rose 50.6% year-on-year, to over EUR 7,074 million, confirming both the company's financial strength and large capacity for cash generation, and permitting a 16.4% cutback in debt.
These results were achieved in a scenario of high crude oil prices, with Brent oil averaging a rise of 42.5% year-on-year, as well as the stability of the dollar versus the euro. The company's refining margin indicator reached $8.46 per barrel in 2005, 48.2% above the average for 2004.
16.4% reduction in debt
Repsol YPF net debt at December 2005 was EUR 4,513 million, EUR 885 million lower than in December 2004. This reduction came mainly from the strong cash flow generated in the period, which was also sufficient to clearly finance the investments made in the year.
The net debt to capitalization ratio fell to 18.1%, posting a 6.2 percentage point drop with respect to December 2004.
Investments in 2005 were slightly lower year-on-year, at EUR 3,713 million, and went mostly to exploration & production (EUR 1.948 million) and refining & marketing (EUR995 million).
Exploration & Production: income from operations rises 6%
At EUR 3,246 million, income from exploration & production operations in 2005 was 6% higher than the EUR 3,062 million posted a year earlier.
This growth was basically driven by the increase in crude oil reference prices and gas selling prices in Trinidad & Tobago and Argentina.
The Repsol YPF liquids realization price averaged $37.14 (EUR 31.37) per barrel versus $30.85 (EUR 24.83) per barrel in 2004. The average price of gas was $1.60 per thousand standard cubic feet (tscf), 24% up on the $1.29 per tscf registered in 2004, shored up by higher average retail prices for gas in Trinidad & Tobago and Argentina.
The company's average oil and gas production in the year, at 1,139,400 boepd, was 2.3% less than in 2004. This decrease was mainly the result of strikes in Argentina (5,700 boepd), scheduled turnovers and operating problems (2,900 boepd), and the effect of high crude oil prices on production sharing contracts (3,600 boepd).
Gas production increased 1.6%, to 608,300 boepd, with enhanced production mostly from Trinidad & Tobago, Bolivia and Venezuela, which offset lower performance from Argentina and Algeria.
Repsol YPF reduced on January 26th proved reserves by 1,254 million barrels of oil equivalent. The negative revisions affected 71% of gas, and are concentrated 52% in Bolivia and 41% in Argentina.
Investments during 2005 in the exploration & production business area rose 64.4% to EUR1,948 million. Investment in development represented 56.5% of total investment, and was spent mainly in Argentina (64.9%), Trinidad & Tobago (8.9%), Venezuela (8.1%), Bolivia (4.5%), Ecuador (3.9%), Brazil (3%) and Libya (1.7%).
Refining & Marketing: income from operations rises 69%
Income from operations in the refining & marketing area, at EUR 2.683 million, was up 69.3% year-on-year.
This considerable rise is mainly attributable to the positive performance of refining margins, which rose 48.2%. Marketing margins were similar year-on-year in Spain, but lower in Argentina.
Total oil product sales increased 5.4% over 2004 levels to 57.9 million tons. Sales in Spain were 1.8% up year-on-year, and in Argentina, Brazil and Bolivia (ABB) rose 4.9%. In the rest of the world, oil product sales showed a 23.7% growth, reaching 8.4 million tons. Sales to our own marketing network were higher in Spain, ABB and the rest of the world.
Turning to the LPG business, total sales reached 3.3 million tons, showing a 3.9% rise from 2004. In Europe there was 2.9% sales growth thanks to larger volumes in Portugal which compensated for a 1.7% drop in Spain. In Latin America, sales were 5.2% higher year-on-year shored up by strong growth in Ecuador (9.4%) and Peru (8.3%).
In 2005, investments in refining & marketing were EUR995 million, and were mainly allotted to current refining projects and the acquisition of LPG assets in Portugal.
Chemicals: income from operations rises 18%
In Chemicals, income from operations improved 17.6% year-on-year to EUR308 million, versus EUR262 million a year earlier. Strong performance here came from wider international margins on our product mix and the income contribution from the Sines complex acquired in Portugal.
Total petrochemical product sales reached 4.64 million tons, 13.3% more than in 2004.
Investments in Chemicals totaled EUR170 million versus EUR292 million in 2004, and were mainly spent on increasing capacity, particularly at the propylene oxide/styrene plant in Tarragona, and in upgrading existing units.
Gas & Power: income from operations rises 25.5%
Income from Gas & Power operations in 2005 rose 25.5% to EUR389 million, versus the EUR310 million posted in 2004.
There was improvement in gas distribution in Spain and also in Latin America, where performance was boosted by organic operating growth in Mexico, Colombia, and Brazil.
2005 investment in gas & power amounted to EUR457 million versus EUR777 million the year before.
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