REPSOL: 2Q’20 TRADING STATEMENT (ANÃLISIS BANCO SABADELL)
With the trading statement, poor 2Q’20 results that are already priced in. 2H’20 guidance is key. BUY.The 2Q’20 trading statement (results to be released on 23/07) should not be a surprise in crude prices (-41% vs. 1Q’20 to US$ 29.60 vs. US$ 29 BS(e) in 2020), in production (-10% to 640 kboe vs. 650 kboe BS(e) in 2020) or in refining margin (-36% to US$ 3/barrel vs. US$ 4 BS(e) in 2020 and US$ 3.90 average in 1H’20). We estimate € -311 M of Net Profit in 2Q’20, leaving the 1H’20 figure at € 136 M vs. € 757 M BS(e) in 2020 and € 695 M consensus). We do not expect a reaction to the results, but rather the guidance to be given in the conference call. We think REP has room to rise if the guidance is slightly positive, as since March lows the stock has only recovered 37% of the drop vs. 45% in its sector and 60% in crude oil. The share price is factoring in a long-term oil price slightly above US$ 40/barrel vs. our estimate of US$ 53.
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.
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