Downstream Performance Boosts Repsol Earnings; Increases Dividend and Will Repurchase More Shares

Repsol’s fourth-quarter adjusted earnings rose to EUR 2,007 million compared with adjusted earnings of EUR 872 million largely on higher refining margins and improved utilization rates. Full-year adjusted earnings for 2022 strengthened even further to EUR 6.7 billion compared with EUR 2.5 billion the year before.

As a result, Repsol increased its 2023 dividend 11% to EUR 0.7 per share from EUR 0.63 per share. After finishing its buyback of 200 million shares three years early, Repsol announced a new repurchase program of 35 million shares maximum. Repsol will also propose a capital reduction of 50 million shares through the redemption of its own shares. Our EUR 15 fair value estimate and no-moat rating are unchanged.

Repsol will increase capital spending in 2023 to EUR 5 billion with half on oil and gas operations and a quarter on renewable energy projects. Full-year capital spending in 2022 amounted to EUR 4.2 billion, of which EUR 1.8 billion was spent in the fourth quarter. Investment in the quarter included ongoing construction of a Spanish biofuels plant and upstream oil projects in Alaska, Eagle Ford (U.S.), and Lapa South-West (Brazil).

Operating cash flow for the quarter increased to EUR 2.8 billion from EUR 2.1 billion the year before, which more than covered capital spending and dividends.

Net debt including leases decreased considerably to EUR 2.3 billion from EUR 5.7 billion the prior year leaving Repsol with a gearing ratio of 8%, one of the lowest of its peer group.

Upstream’s adjusted earnings fell to EUR 598 million in the fourth quarter from EUR 624 million a year prior on lower gas realization prices and higher production costs. Production fell to 551,000 barrels of oil equivalent a day from 561 mboe/d last year due to country exits.

The industrial (refining and chemical) segment’s adjusted earnings grew to EUR 1,119 million compared with adjusted earnings of EUR 267 million the year before on strong refining margins and higher utilization rates.