Spanish oil company Repsol recorded an increase in its profit for the third quarter of 2018 driven by improvement in its upstream business.
Repsol said on Wednesday that its operating income for the third quarter 2018 increased to 934 million euros from 653 million euros in the same period last year.
Repsol’s adjusted net income increased to 588 million euros in this year’s third quarter from 528 million euros in the last year’s quarter.
The oil company’s net income rose to 625 million euros from 527 million euros last year.
In the upstream division, Repsol’s adjusted net income was 220 million euros, an increase from 3Q 2017.
The production during the quarter reached an average of 691,000 barrels of oil equivalent per day, owing to increased production from Libya, the acquisition of interest in the Visund field located offshore Norway and higher production coming from new projects.
In the first nine months of the year Repsol posted net income of 2.171 billion euros, an increase of 37% over the same period of the previous year and a net income of 1.583 billion euros. According to the company, this was the highest nine-month result in the last decade.
Adjusted net income, which specifically measures the performance of the company’s businesses, increased by 11% to 1.720 billion euros.
Repsol increased its hydrocarbon production in the first nine months of 2018 by 4% in comparison with the same period in 2017 to an average of 713,000 barrels of oil equivalent per day. This growth was supported by the startup of projects in Trinidad and Tobago, the United Kingdom, Algeria, Peru and Malaysia.
The Upstream unit (Exploration and Production) earned 1.015 billion euros, twice the result obtained between January and September of last year, as a result of implemented efficiency measures, higher volumes and rising international prices.
Relatively balanced market
On the crude oil market, prices have continued to increase throughout 2018, with Brent crude prices hitting around $85 per barrel ($/bbl), 30% up on the price at the end of 2017 and 200% up on the lows seen in 2016. The balance suggests that the market is relatively stable in terms of supply and demand, despite inventories in the OECD continuing to fall, Repsol said.
OPEC continues its policy at the end of 2016 and although average compliance is around 120% to date in 2018, over the course of the year the commitment to cutbacks has seen levels of compliance in excess of 170%. These high levels of compliance can be traced in large part to the massive decline in production in Venezuela, with a decrease of almost 800 thousand Bbl/d in just one year.
On the other hand, the re-imposition of US sanctions on Iran, following the former’s exit from the nuclear agreement at the start of May, has seen tension on the market increase. Sanctions take effect on November 4 and many buyers of Iranian crude are looking for alternatives, which has weakened the country’s production and export levels.
In short, the current situation involves a relatively balanced market, although there is a slight deficit on the supply side, which is keeping prices stable above $80/bbl. At the end of the first nine months of the year, the Brent price stood at an average of US$72.1/bbl, while the crude oil WTI price averaged out at US$66.8/Bbl, a difference of US$5.3/bbl between the two.
Offshore Energy Today Staff