Repsol Q3 2024 Update

Repsol (ETR:REP) (OTC:REPYY) is facing scrutiny after its Q3 2024 trading update revealed weak refining margins and lower production figures, impacting performance.

The Spanish energy giant released its update on Wednesday, previewing the full results expected later this month.

Key Highlights:

• Refining Margins: A significant drop was observed with refining margins falling to $4 per barrel, down from $6.3 in Q2, and slightly below the analyst consensus of $4.4 per barrel.
• Analysts from RBC Capital Markets noted that given the update, consensus estimates might be overly optimistic.
• Efficiency: Despite the margin decline, refining utilization rates remained steady at 87.7%, indicating ongoing operational efficiency.
• Outlook: October shows no improvement in refining margins, which are still around $4 per barrel.

Production Figures:

Repsol's production decreased to 553,000 barrels of oil equivalent per day, which is below the expected 568,000 kboe/d, down from 589,000 kboe/d last quarter.
– Causes of the decline include an outage in Libya from August 30 to October 4, and decreased activity in U.S. onshore operations, notably in the Marcellus and Eagleford regions.
– While the Libya outage impacted overall production, its effect on earnings may be limited due to the higher tax rates in the region.

Financial Overview:

Repsol also faced €170 million in windfall taxes during the quarter, exerting additional pressure on profits. However, a release in working capital from decreasing commodity prices could offer some relief.
– The company announced asset sales worth approximately €140 million, which may help buffer against current economic challenges.