Repsol Raises Cost-Savings Target, Cuts Investments
MADRID, Nov 3 (Reuters) - Spanish oil company Repsol reported higher than expected third-quarter profits on Thursday, helped by a tighter control on spending, and raised its cost-savings target for the year by 300 million euros to 1.4 billion euros ($1.56 billion).
Like many of its rivals Repsol has sought to cut spending to adapt to the slump in oil prices, which are down by half since June 2014. Royal Dutch Shell and BP, both managed to beat earnings forecasts this week by making deep cuts to spending.
The Spanish firm said it had raised its own cost-savings target by 300 million euros this year after making faster than anticipated progress in the first nine months.
Chief Financial Officer Miguel Martinez also told a conference call Repsol would reduce investments in 2016 by some 400 million euros to 3.5 billion euros.
This belt-tightening has so far helped Repsol counter an erosion in refining margins as well as losses on the production side in the third quarter.
Repsol's net profit on a current-cost-of-supplies basis was 307 million euros in the period, up 93 percent from a year earlier and above the 296 million euros expected by analysts in a Reuters poll.
It reported a 28 million euro loss in its upstream operations, down from a 395 million-euro loss in the same period last year.
A ramp-up in production in Latin American fields Cardin IV in Venezuela and Sapinhoa in Brazil offset maintenance stoppages at sites in Trinidad and Tobago, Vietnam and Malaysia, it added.
In Repsol's downstream operations, which includes refining, earnings fell 42 percent in the July to September period from a year earlier.
Martinez said refining margins would improve from the $5.10 per barrel of crude registered in the third quarter, as domestic demand increased and two of its main refineries returned to normal after maintenance.
He projected that the margin would reach $6.97 per barrel on average for 2016.
Repsol has been shedding assets as well as cutting costs to help shrink its large debt pile, which has been under scrutiny from credit ratings agencies.
Net debt fell to just under 10 billion euros at the end of September from 11.7 billion euros three months earlier after it sold a 10 percent stake in Gas Natural.
At 1510 GMT Repsol shares were up 1.25 percent at 12.51 euros, reversing earlier losses.
($1 = 0.8997 euros)
(Editing by Jane Merriman, Greg Mahlich)
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