Spanish oil company Repsol posted net income of 761 million euros in the first quarter of 2015, a 6% drop from the 807 million euros posted in the first quarter of 2014 when 299 million euros of earnings and capital gains were recorded, due in large part to the definitive execution of the sale of liquid natural gas (LNG) assets.
Adjusted net income, which specifically measures how the business units are performing, was 928 million euros. This represents a 74% increase over the results of the first quarter of 2014.
Repsol has explained that the strong performance of the refining and chemicals business units and the strength of the dollar against the euro compensated the effect of the 50% drop in oil prices on the exploration and production business units.
Upstream: Production increased
The company posted a net loss of 190 million euros in the Upstream unit (exploration and production), compared to the 255 million euros obtained in the first quarter of 2014, due in large part to the interrupted production in Libya and the sharp fall in oil prices.
Repsol’s realization prices performed better than the international benchmarks, the company said. Repsol’s average crude realization price fell by 48%, while Brent fell by 50.2%. For its part, Repsol’s price of production for gas fell by dropped 33%, compared to a 38.8% drop in the Henry Hub price.
During this quarter, Repsol made a new discovery in the K-4 well in Russia, in addition to the 12 discoveries that it made in 2014. In April, Repsol drilled its third positive survey in the Sud-Est Illizi block, in Algeria, confirming the great potential of the area explored.
The ongoing exploratory and appraisal campaigns in Alaska, Russia and Brazil continue, with good expectations from the results already obtained, the company added. Repsol further said that in Alaska, drilling goals were accomplished and production tests were positive. In Russia, a new discovery well in block K-1 will add contingent resources, and in Brazil the Pao de Açucar appraisal 1 well consolidates certifiable volumes of resources in the area.
The effect of the lower price of crude was partially compensated by the increase in hydrocarbon production. Repsol increased production in 8 of the 12 countries in which it operates. The Kinteroni project in Peru, the Sapinhoá field in Brazil, and the Margarita-Huacaya project in Bolivia all stand out.
As a consequence, the group’s total production increased by 3.7%, for a total of 354,600 barrels of oil equivalent. Had it not been for Libya, and the conflict that the country is experiencing, production would have increased by 10% compared to the first quarter of 2014, the company explained.
Investment in the Upstream unit increased 59% to 753 million euros over the quarter.