Morningstar | Repsol Bucks Trend by Posting First-Quarter Earnings Increase
Repsol stood out among its peers during the first quarter by posting an increase in adjusted earnings to EUR 618 million from EUR 583 million as gains in the upstream offset downstream weakness. Upstream adjusted earnings rose by 12.5% to EUR 323 million from EUR 287 million last year as lower exploration costs and the appreciation of the USD against the EUR offset lower oil prices and lower production volumes. Production fell by 3.7% year over year to an average of 700 mboed in first-quarter 2019, primarily due to stoppage of production in Libya and lower gas demand in Venezuela. It expects full-year production of 720 mboed. Despite a 9.9% increase in the sales of petrochemical products from the year before, lower refining margins meant that downstream adjusted earnings fell by 4.9% to EUR 404 million from EUR 425 million.During the quarter, Repsol generated adjusted operating cash flow of EUR 1.2 billion--sufficient to cover capital spending and shareholder returns. Its cash flow break-even level is approaching $50 a barrel. Consistent with its prior commitment to increase the dividend to EUR 1 per share by 2020, Repsol plans to increase the dividend by 6% to EUR 0.95 per share in 2019. While it will maintain a scrip option, it plans to repurchase all shares issued as a result of it.
As Repsol largely on track to meet its targets, our fair value estimate and moat rating are unchanged.
Repsol is an oil and gas company. Co. is engaged in all the activities relating to the oil and gas industry, including exploration, development and production of crude oil and natural gas, transportation of oil products, liquefied petroleum gas (LPG) and natural gas, refining, the production of a wide range of oil products and the retailing of oil products, oil derivatives, petrochemicals, LPG and natural gas, as well as the generation, transportation, distribution and supply of electricity. Co. operates in more than 40 countries. Co.'s operations are divided into four segments: Upstream, Downstream, LNG and Gas Natural Fenosa.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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