Spain’s Repsol Upping Capex to Pre-Pandemic Ranges, with Latin America E&P Focus

Spanish built-in vitality firm Repsol SA expects to extend capital expenditures (capex) to pre-pandemic ranges of three.8 billion euros ($4.3 billion) in 2022, in keeping with CEO Josu Jon Imaz.

The Madrid-based agency has an exploration and manufacturing (E&P) presence in 15 international locations, together with an intensive portfolio all through the Americas.

The forecast improve in capex is “largely as a consequence of increased funding within the transformation of our companies, the flexibleness of our E&P, and in initiatives that profit from the worth state of affairs,” Imaz instructed analysts throughout a convention name to debate fourth quarter and full-year 2021 earnings.

The 15-country footprint is down from 26 international locations simply two years in the past, Imaz mentioned. Repsol now’s “concentrating exercise in areas the place the corporate has aggressive benefits,” administration mentioned.

These areas embrace Mexico, Trinidad and Tobago, Brazil, Bolivia, Colombia and Peru.

Repsol in September accomplished a deepwater appraisal effectively at offshore Block 29 in Mexico’s Salina Basin, the place a Repsol-led consortium introduced two oil discoveries in 2020.

The delineation effectively produced a “constructive outcome,” administration mentioned, explaining that is “a key milestone for approval to the event section.”

Repsol is the primary worldwide firm to conduct such a take a look at in Mexico’s deep waters, the corporate mentioned. 

Final yr additionally noticed the startup of Repsol’s Matapal pure fuel undertaking positioned about 80 km off the southeastern coast of Trinidad. Preliminary manufacturing is anticipated to vary from 250-350 MMcf/d.

In Brazil, Repsol and companions Equinor ASA and Petróleo Brasileiro SA, aka Petrobras, accredited the event idea for the BM-C-33 block. The block targets a fuel and condensate discipline positioned inside the Campos Basin in Brazil’s prolific pre-salt layer.

In Bolivia, Repsol in January 2021 confirmed a pure fuel discovery at its operated Caipipendi contract space. The invention is tentatively estimated to comprise round 1 Tcf of reserves and potential assets.

About 30% of the 2022 capex funds is earmarked for low-carbon initiatives, in keeping with administration. 

Roughly 1.7 billion euros ($1.92 billion) is slated for the upstream, Imaz mentioned, with about 1 billion euros ($1.13 billion) going to the commercial phase and one other 1 billion euros for the “customer-centric and renewables” companies.

Pure Gasoline Costs Soar

Sturdy commodity costs helped Repsol obtain its strongest monetary efficiency in over a decade in 2021, Imaz mentioned.

“The primary yr of our strategic plan to 2025 has consolidated our journey in the direction of our long-term objectives and the vitality transition,” he defined. “Furthermore, the additional money generated in a better commodity worth state of affairs has allowed us to bolster our monetary place and to maneuver into the following section of the capital allocation framework outlined in our technique.”

Imaz mentioned that “underneath our planning assumptions for 2022, we can improve capex considerably and enhance shareholder remuneration by way of extra buybacks, all whereas sustaining debt underneath management.”

[Newly Updated: NGI’s 2023 Map of North American Natural Gas Pipelines, LNG Facilities, Shale Plays & Market Hubs includes 200+ pipelines, 160+ market hubs, 60 LNG terminals, 40+ storage facilities, and more. Get your map today.]

Repsol administration mentioned that in 2021, “Liquefied pure fuel (LNG) from the US was in excessive demand within the Asian market, which was keen to pay excessive costs to safe provides, and later additionally in Latin America and Europe.”

Imaz highlighted that U.S. pure fuel costs “have reached ranges not seen on a sustained foundation since 2014,” averaging $5.80/MMBtu in This fall, greater than double the worth seen in 4Q2020.

“In Europe, fuel costs reached file ranges within the fourth quarter, pushed by a decent supply-demand stability, geopolitical tensions, [and] competitors from Asia.”

He cited that the Dutch Title Switch Facility benchmark fuel worth averaged $14/MMBtu for full-year 2021, up from $3 in 2020.

Repsol’s robust efficiency in 2021 “is evident proof of our high-quality built-in portfolio, disciplined execution and forward-looking technique,” the CEO mentioned. “We’re popping out of 2021 with a strong monetary place, able to speed up our technique to be a internet zero firm by 2050 by way of the development of our intermediate decarbonization targets and with a proposal to the following Annual Normal Assembly to extend our shareholder distribution.” 

‘Worth Over Quantity’

The corporate’s 2021-2025 strategic plan prioritizes “worth over quantity,” in keeping with administration.

“Between 2021 and the start of 2022, we now have accomplished our exit from six international locations, getting nearer to the strategic goal of concentrating our geographical footprint, contributing to [increasing] the resilience of our E&P enterprise,” Imaz mentioned. “Within the fourth quarter, we reached an settlement to divest our place in Ecuador and full the disposal of our final remaining asset in Vietnam.”

The corporate achieved an natural free money circulation breakeven oil worth of beneath $30/bbl for its upstream belongings in 2021.

Repsol’s 2022 funds assumes a worth deck of $70/bbl Brent oil and $3.70/MMBtu Henry Hub pure fuel.

“Due to this fact, price-wise, we now have deliberate 2022 to be, on common, much like 2021, anticipating a better money technology, due to an elevated manufacturing, higher refining margins and improved total operations,” mentioned Imaz.                   

Repsol is forecasting common manufacturing of round 600,000 boe/d in 2022, pushed by the ramp-up of the Yme undertaking in Norway, increased volumes in unconventionals and decrease anticipated downtimes.

Repsol has set a capex funds of 19.3 billion euros ($21.8 billion) for 2021-2025, with 35% of that complete earmarked for low-emission initiatives.

Imaz mentioned Repsol is “targeted on maximizing worth on this constructive atmosphere, making essentially the most out of our present portfolio whereas having, as an organization, a really clear decarbonization pathway to 2025 and 2030.” 

By 2030, Repsol is concentrating on a 55% discount in emissions from operated belongings (Scope 1 and a couple of), and a 30% discount of internet emissions (Scope 1, 2 and three) versus 2016 ranges.

Sturdy Outcomes

Repsol reported common realized costs of $71.10/bbl for oil and $6.60/Mcf for pure fuel throughout 4Q2021, versus $40.40/bbl and $2.70/Mcf in 4Q2020.

Manufacturing totaled 561,000 boe/d within the fourth quarter, comprising pure fuel output of two.08 Bcf/d and liquids manufacturing of 190,000 b/d. These figures evaluate to 628,000 boe/d, 2.31 Bcf/d and 217,000 b/d within the year-earlier interval.

The decline in output was as a consequence of deliberate and unplanned upkeep actions in Bolivia, Canada, the UK and Malaysia, the pure decline of fields within the Marcellus and Eagle Ford shales and in Canada, the destructive manufacturing sharing contract impact as a consequence of increased oil and fuel costs in addition to the divestment of manufacturing belongings, administration mentioned.

Manufacturing elevated, nevertheless, in Venezuela, Norway, Trinidad and Tobago, and Colombia.

Accrued upstream investments totaled 534 million euros ($604 billion) in 4Q2021, a 352 million-euro improve from 4Q2020.

Exploration investments accounted for 13% of the overall, and had been allotted to the US (52%), Norway (16%), Mexico (11%) and Bolivia (5%).

Repsol, which experiences in euros (1 euro/US$1.13), posted internet earnings of 560 million euros (0.37 euros/share) for the fourth quarter, versus a lack of 711 million euros (minus 0.47 euros) in 4Q2020. Full-year internet earnings was 2.5 billion euros (1.64 euros/share) in 2021, in comparison with a lack of 3.29 billion euros (minus 2.13 euros) in 2020.