Petrotahlil - Spanish integrated oil and gas firm Repsol is targeting deeper cost savings after swinging to a loss in the third quarter.
The firm said today that it now expects 2020 capital expenditure (capex) to come in €1.2bn lower than its initial budget. Previous guidance was for a €1.1bn reduction. Repsol is also targeting €500mn of operating expenditure (opex) savings this year, rather than €450mn as previously outlined. As of September, more than €350mn of the opex savings had been already captured, Repsol said.
The company swung to a €94mn loss in July-September from a €333mn profit in the same period last year. Lower oil and gas prices than a year earlier hit the firm's bottom line, along with a drop in upstream production, narrower refining margins, as well as "provisions" and other one-off charges related to workforce restructuring. Excluding these one-off items and inventory effects, Repsol reported an adjusted profit of €7mn in the third quarter, down from €522mn a year earlier.
Repsol's upstream division performed better in July-September than it did in the previous three months thanks to an improvement in crude prices over that period, but adjusted upstream profit was still 77pc lower than in the third quarter of 2019. Repsol produced 616,000 b/d of oil equivalent (boe/d) in July-September, down by 13pc on the year. The fall was driven by a drop in production in Libya, the North Sea and North America.
Repsol's industrial division, which encompasses refining and petrochemicals, swung to an adjusted loss in the third quarter. Refining profitability was squeezed by "narrower middle distillates, gasoline and light-to-heavy crude oil spreads that were transferred into lower distillation and lower refining margins", the firm said.
Repsol's benchmark refining margin indicator dipped into negative territory in the third quarter, and refinery runs dropped to 8.5mn t (677,000 b/d) from 11.2mn t a year earlier.
The firm's petrochemical operations benefited from higher sales but this was more than offset by "lower margins due to a generalised drop in petrochemical product prices especially for those linked to the auto sector", it said.
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