Spanish oil and gas company Repsol booked a loss in the second quarter of the year after being forced to re-evaluate its upstream assets due to the effects of the coronavirus pandemic and the low oil price environment.
Repsol said on Thursday that the collapse in the prices of raw materials during the first half of the year affected the valuation of its inventories, with a negative effect of 1.088 billion euros.
Furthermore, in light of this decrease and during a period of financial prudence, the company has reformulated its forecast for future crude and gas prices and adjusted the value of its Upstream assets which is reflected in special items results of -1.585 billion euros.
Accordingly, the company’s net loss for the first half of the year stood at 2.484 billion euros.
Repsol’s new average price deck for the period 2020 to 2050, in real terms of 2020, stands at 59.6 $/bbl Brent and 3.3 $/Mbtu Henry Hub.
For the 2Q 2020, Repsol booked a loss of about 2 billion euros compared to a profit of 525 million euros in 2Q 2019. The result was mainly due to impairments in the Upstream segment and the impact of the inventory effect.
Thanks to the measures adopted as part of its Resilience Plan, which included additional reductions in operating costs, Repsol reduced its net debt during the last quarter to 3.987 billion euros.
This is around 500 million euros less than that registered as of 31 March.
Consequently, the company has liquidity of 9.762 billion euros, representing 2.43 times the short-term maturities.
Repsol’s Upstream production reached an average of 640 kboe/d in the second quarter of 2020, 55 kboe/d lower year-on-year.
This was primarily due to the stoppage of production in Libya, lower gas demand in Bolivia, Peru and Indonesia caused by Covid-19 as well as the shutdown of Akacias (Colombia), Chauvin (Canada) and the reduction of production in Duvernay (Canada) due to low prices, the Piedemonte license expiration (Colombia), maintenance programs and the natural decline of fields.
These were partially compensated by the connection of new wells in Marcellus (USA) and the acquisition of an additional 63 per cent of working interest in Eagle Ford (USA) in December 2019.