Repsol completes sale of LNG assets to Shell


Repsol has completed the sale of liquefied natural gas (LNG) assets with the handover to Shell of assets in Peru and Trinidad & Tobago, after obtaining all relevant authorizations. In October 2013, Repsol sold its stake in Bahía Bizkaia Electricidad (BBE) to BP, which exercised a purchase option over the asset.

The combined transactions represent total proceeds for Repsol of $4.3 billion ($4.1 billion from the sale of assets to Shell and $0.2 billion from the sale of BBE to BP), and the company additionally sheds financial commitments and non-consolidated debt in line with the figures announced in February 2013 when the assets´ sale was agreed upon.

The sale, which includes the minority stakes in Atlantic LNG (Trinidad & Tobago,) Peru LNG, and BBE, as well as the LNG sale contracts and time charters with their associated loans and debt, has generated $2.9 billion for Repsol in profit and capital gains after tax, slightly higher than the guidance given when the transaction was agreed upon in February.

As a consequence of the transferral of assets, and in line with the company’s policy of financial prudence, Repsol will adjust the book value of the North American assets with a provision of $1.5 billion after tax, in line with new fiscal regulations. The resulting capital gains yet to be booked will be included in the accounting of 2013 and 2014, in accordance with the transferral date of the assets included in the agreement.

Repsol and Shell have additionally signed an LNG supply agreement by the latter to the Canaport regasification terminal in Canada of 1 million tons over a 10-year period.

Following the completion of the sale, with an economic date set at September 30, 2012, Repsol reduces net debt by $3.3 billion and significantly strengthens its balance sheet. With this transaction, Repsol has divested assets for more than €5 billion, surpassing the objectives outlined in the 2012-2016 Strategic Plan to divest between €4 billion and €4.5 billion in the period.

Repsol's debt is rated one rung above junk by the three main rating agencies, and Moody's has said its stance was strongly related to the ability of the oil company to reduce debt.

Alvaro Navarro, an analyst at Madrid broker Intermoney, said, "The formal closure of the operation helps to give visibility to the debt-reduction targets and the guidance lines set by the ratings agencies."

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