Repsol's profit beats forecasts

Repsol has reported quarterly profit that beat forecasts, easing concerns about the Spanish oil group's ability to fund development projects after Argentina seized its majority stake in energy company YPF. High oil prices, the recovery of production in Libya and strong demand for liquefied natural gas (LNG) in Asia underpinned Repsol's adjusted first-quarter current cost of supply net profit — a key industry measure. Repsol's €635 million (Dh3 billion) profit was down 3 per cent on the 2011 period because of weak refining margins and lower sales of chemicals, but was well ahead of estimates in a €479 to €527 million range in a Reuters poll. Repsol shares were up 4.3 per cent at €13.695 at 9.40am GMT Thursday, outperforming a 0.3 per cent lower European oil and gas sector index. YPF accounted for half of Repsol group output and 21 per cent of net profit, and its loss has led to fears the Spanish group might struggle to fund costly projects in Brazil, West Africa and elsewhere, and that it might have to cut its dividend. Yet for the last full period when it will contribute to Repsol's performance, YPF was a drag. In April, Argentina's president, Cristina Fernande, announced the expropriation of 51 per cent of YPF from Repsol, which has promised a legal battle for fair compensation. Analysts said Repsol had generated more profit from its LNG unit and from its lucrative Libyan fields than expected, after the end of fighting last year to oust Muammar Gaddafi. "We have underestimated the positive impact of the normalisation of production in Libya," Filipe Rosa at investment bank Espirito Santo said in a note to clients.