Spanish energy group Repsol posted on Thursday forecast-beating fourth-quarter adjusted income, pushing its shares up even though write-downs on the value of oil and gas assets dragged it to a second consecutive annual net loss.
Curbs on mobility to stop the spread of the coronavirus sapped energy demand last year and pushed companies including much larger peer BP into heavy losses, piling extra pressure on a drive among European oil majors to invest more in lower-carbon businesses.
But in the fourth quarter, Repsol’s adjusted net income of 404 million euros ($486.54 million) far outstripped the 134 million expected by analysts in a poll compiled by the company.
Shares rose about 2.7% in morning trade and stayed among leading gainers on Madrid’s blue-chip Ibex index. This takes gains so far this year to more than 17% after the company lost almost 40% of its market value in 2020.
As well as the better than expected adjusted income, the share rise was also partly due to a plan to buy back about 2.58% of the company’s shares, said Luis Navia, an analyst at CM Capital Markets in Madrid.
Without the adjustments and counting the write-downs as part of a plan to limit carbon emissions, Repsol saw a net loss of 711 million euros in the quarter. Annually, it narrowed its net loss to 3.29 billion euros compared with 3.82 billion the previous year.
Oil prices plummeted to as low as $15 per barrel in April and ended the year 35% lower on average, Repsol noted.
Repsol was an early mover among European energy companies in pledging to cut planet-warming emissions as investors and governments call for action on climate change.
It now plans to spin off its low-carbon business and sell a stake to a partner or on public markets in the next two years.
($1 = 0.8304 euros)