Repsol Q1 profit drops 28% as oil prices begin their decline

Bloomberg

Repsol SA’s first-quarter profit fell 28% as oil prices began their unprecedented decline, but it beat analysts’ estimates and shares rose.
Earnings from the Spanish energy producer, like those of its peers, reflect what’s proving to be a historic moment for the industry. Crude’s collapse has forced companies to make drastic cuts in spending and, in some cases, slash shareholder payouts. Still, Repsol has performed better than some of its rivals.
It maintained the dividend, and said net debt won’t increase at the end of 2020 compared with a year earlier. This will ease pressure on the balance sheet at a time other oil majors have been borrowing to maintain access to ready funds as the downturn drains cash flows. The decline in Repsol’s earnings is also less than that of rivals such as Eni SpA.
French major Total SA also reported a 35% decline in first-quarter earnings on Tuesday. It deepened spending cuts for the year and offered to pay some of the dividend for the last three months of 2019 in shares to help preserve cash.
Repsol has already halted its share buybacks and cancelled plans to unveil a new clean-energy strategy this month.
Adjusted net income fell to 447 million euros ($488 million) in the first quarter, beating analyst estimates. Earnings from oil exploration and production plunged to 90 million euros from 323 million euros a year earlier.
Repsol’s shares rose as much as 9.4% and were 7% higher at 8.20 euros in Madrid. The stock has declined 41% this year.
Benchmark Brent crude is currently trading below $29 a barrel. It’s down more than 50% since the start of the year as the coronavirus pandemic wipes out fuel demand, meaning oil companies that also refine crude are hit twice over. Repsol estimates an average Brent price of $35 from April to December this year.