- Adjusted Income: EUR859 million, 4% above Q2 2023, 32% below Q1 2024.
- Cash Flow from Operations: EUR0.9 billion, 32% lower quarter-on-quarter, 45% below last year.
- Net CapEx: EUR1.5 billion in the quarter.
- Net Debt: EUR4.6 billion, a EUR0.7 billion increase compared to March.
- Dividend: EUR0.9 per share in 2024, approximately a 30% increase over 2023.
- Share Buyback Program: New 20 million share buyback program announced.
- Brent Oil Price: Averaged $85 per barrel, up 2% quarter-over-quarter, 9% above Q2 2023.
- Henry Hub Gas Price: Averaged $1.9 per million BTU, 17% below previous quarter, 10% lower than a year ago.
- Refining Margin Indicator: Averaged $6.3 per barrel, 45% lower quarter-over-quarter.
- Upstream Adjusted Income: EUR427 million, 4% increase over Q2 2023, 3% below Q1 2024.
- Production: Averaged 589,000 net barrels per day.
- Industrial Adjusted Income: EUR288 million, 16% below a year ago.
- Petrochemical Margin Indicator: Averaged EUR269 per ton, 31% over the previous quarter, 6% lower than a year ago.
- Customer Division Adjusted Income: EUR158 million, 7% higher year-over-year.
- Retail Power and Gas Client Base: Reached 2.4 million customers in June, 8% increase compared to December.
- Low Carbon Generation Adjusted Income: EUR1 million, compared to losses of EUR6 million in Q1 2024 and a positive result of EUR12 million a year ago.
- Installed Operational Renewable Capacity: Reached 3.1 gigawatts in June.
Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Repsol SA (REPYF, Financial) delivered resilient results with a second-quarter adjusted income of EUR859 million, 4% above the same period in 2023.
- The company maintained a strong operational performance across divisions despite a less favorable refining environment.
- Repsol SA (REPYF) completed a significant share buyback program, reducing share capital by 40 million shares and announcing an additional 20 million share buyback for the second half of the year.
- The upstream division reported an adjusted income of EUR427 million, a 4% increase over the same quarter last year, driven by higher oil realization and higher volumes sold.
- Repsol SA (REPYF) is progressing well with key projects like Pikka in Alaska and Leon-Castile in the Gulf of Mexico, expected to start production in the next 12 to 18 months.
Negative Points
- Cash flow from operations was EUR0.9 billion, 32% lower quarter on quarter and 45% below last year, impacted by a EUR1 billion payment related to acquisitions and settlements.
- Net debt increased by EUR0.7 billion compared to March, reaching EUR4.6 billion, primarily due to the purchase of treasury shares and new leases.
- The refining margin indicator averaged $6.3 per barrel, 45% lower quarter over quarter, affected by narrower middle distillate differentials.
- The chemical business faced challenges with a 31% decrease in the petrochemical margin indicator compared to the previous quarter.
- The low carbon generation division reported minimal adjusted income, negatively impacted by a decline in power prices in Spain and lower contributions from combined cycles.
Q & A Highlights
Q: Could you update us on the divestment plans for the year, both in upstream and low carbon? And how should we think about the decision to go to the low end of the payout ratio range?
A: We remain confident about the net CapEx guidance of EUR5 billion for the whole year, which includes the ConnectGen acquisition. We expect additional divestments and asset rotations in upstream and renewables in the second half of the year. For 2025 and 2026, we have hedged 55-60% of our North American gas production with a floor of $3 per million BTU and a cap at $6.1 per million BTU.
Q: Could you provide some color on the 20 million share buyback announced for the second half and the 60 million shares retirement for 2024?
A: The 20 million share buyback reflects expected cash generation under current market conditions. We are targeting a 31% cash flow from operations (CFFO) payout ratio for 2024. If market conditions improve, we may consider additional buybacks in October.
Q: Are you considering shifting some of your renewable investments from Spain to the US due to the tough environment in Spain?
A: We are comfortable with our asset rotation process in Spain and expect a closing in the second half of the year. We are also focusing on wind projects in Spain due to better price capture capacity. In the US, we are developing projects like Outpost, which will add 400 megawatts by year-end.
Q: Could you elaborate on the potential recovery of loans and agreements in Venezuela?
A: We have recovered loans through five cargos from Petroquiriquire and five from Cardon. The agreement to incorporate Tomoporo and La Ceiba fields will help us recover past commercial debt and increase production. This will improve the cash flow profile of our JV with PDVSA.
Q: What are your macro assumptions for the 2024 CFFO guidance?
A: Our assumptions include $80 per barrel for Brent, $2.4 per million BTU for Henry Hub, $8 per barrel for refining margin, and an exchange rate of 1.08 USD/EUR. We expect TTF gas prices around $9.6 per million BTU.
Q: How are you progressing with your hydrogen projects and the potential for geological hydrogen storage?
A: We have identified potential geological storage areas in northern Spain but do not foresee significant investments in the short to mid-term. Most hydrogen produced in the Iberian Peninsula will be used by current consumers like refineries.
Q: What are the drivers for the potential upside in your 2024 CFFO guidance?
A: The potential upside would come from a better macro scenario, particularly higher refining margins and Brent prices. Improved gas prices in the US or Europe could also contribute.
Q: Could you explain the rationale behind the potential merger of your North Sea business with a PE-backed independent E&P?
A: We are exploring ways to optimize our tax NOLs and improve operational efficiencies. Merging with another entity could enhance synergies and improve our business in the North Sea.
Q: What is the status of your refining margins and crude differentials?
A: We expect refining margins to average $7 per barrel in the second half of the year. The availability of heavy crudes from Mexico and Venezuela has been favorable, contributing to our premium.
Q: How are the political changes in Latin America, specifically in Mexico and Venezuela, affecting your plans?
A: In Mexico, we see an openness to international companies and are focused on upstream activities. In Venezuela, we are working within a positive framework to increase production and recover past commercial debt.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
