Repsol YPF's Jan-Sep Profits Rise 24% on High Crude Prices

Spanish oil company Repsol YPF (NYSE: REP) posted January-September net profits of 2.58bn euros (US$3.04bn), up 24% compared to 3Q04 due to high crude prices and refining margins, the company said in its Q3 earnings statement.

January-September operating revenues were 4.5bn euros, up 31% year-on-year. Operating profits over the nine-month period climbed 24% to 2.6nn euros. Repsol YPF's Q3 gas production fell 2.5% to 629,700 barrels of oil equivalent a day (boe/d) compared to 3Q04.

The company attributed the decline to poor weather conditions during the Argentine winter and planned maintenance in Trinidad & Tobago at the liquefied natural gas (LNG) train 1 and the Atlas methanol plant, the statement said.

Downtime at train 1 cost Repsol YPF the equivalent of about 12,000boe/d of lost output, CFO Luis Mañas said during a conference call to discuss results. Mañas expects production in Trinidad to pick up in Q4.

Meanwhile gas production in Bolivia increased 14.4% due to higher exports to Brazil and Argentina, while gas production in Venezuela rose 13.3% due to higher output on the Quiriquire field.

In Argentina, gas prices rose in July 2005 but the crude export parity pricing negatively affected the company's results by 121mn euros in Q3, the statement said.

Repsol YPF's average selling price for crude and refined products in 3Q05 was US$42.50/b compared to US$31.84/b in 3Q04. Gas prices over the quarter rose 25% to US$1.55 per thousand cubic feet, which the company attributes to increases in prices in both Trinidad & Tobago and in Argentina. Prices in Argentina rose 21% in Q3 to US$1.27, the statement said.

Third quarter liquids production at Repsol YPF's ABB division (Argentina-Bolivia -Brazil) fell 7.6% to 397,000b/d due to a 9% drop in Argentine production, which fell due to the natural decline of mature fields and a loss of 9,500b due to a union strike, the statement said.

Production in Bolivia increased 11.7% in Q3. When asked about the political situation in Bolivia and the new hydrocarbons law, Mañas responded, "Clearly we have lost precious time" and any future investments will have to adapt to new legislation.

Repsol YPF will only invest in Bolivia if the industry offers a guarantee for "strong returns," he said.


In August Repsol YPF acquired a 20% stake in the Peru LNG export project, which will export gas from the Camisea gas field from 2008-2009. Its other partners are US company Hunt Oil and South Korea's SK Corporation.

In Venezuela, state oil firm PDVSA recently granted Repsol YPF the Junin 7 block in return for crude supplies to PDVSA in Argentina.

In Brazil, Repsol YPF was awarded 16 offshore exploration and production concessions in the seventh hydrocarbons licensing round held in October, making it the second largest company in terms of number of blocks held in the country after federal energy company Petrobras, Mañas said. Repsol YPF will operate 11 of the 16 blocks itself.


In Argentina, the company is "suffering from the inability to increase margins at the pump," Mañas said, adding that all companies have the same pump price despite GDP growing at about 10%. Repsol has an obligation to supply that country's domestic market before exporting products but "we are making money" in the Argentine refining and marketing business, he said.


Income from January-September operations improved 38% year-on-year to 265mn euros compared to the same nine months in 2004.


Repsol YPF "has expressed its support" for Spanish gas distributor Gas Natural SDG's takeover bid for Spanish power group Endesa, which was launched on September 5, Repsol said in its earnings statement. Repsol holds 30.85% in Gas Natural SDG.

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