Repsol SA plans to divest €6.2 billion in nonstrategic assets and cut spending by 38% “without altering its company profile” as part of its 2016-20 strategic plan.
The company says it has identified “new synergies” following its $8.3-billion acquisition of Talisman Energy Inc. completed earlier this year, enabling it to raise its savings target resulting from the integration to $350 million from the initially expected $220 million (OGJ Online, Dec. 16, 2014).
The synergies supplement the efficiency program included in the strategic plan, the company said. The program will be applied to the entire company and will lead to cost savings, including synergies, of €2.1 billion/year from 2018.
Following the Talisman deal, Repsol’s exploration and production unit will focus on three strategic regions: North America, Latin America, and Southeast Asia.
The plan includes lower exploration expenses, a 40% reduction in investment levels, and production between 700,000-750,000 boe/d guaranteed by current reserves, allowing the exploration and production business to reduce the free cash flow breakeven price, Repsol says.
The company intends a broader integration of refining and marketing activities, with divestments in nonstrategic assets for the downstream unit. This allows the company to set the downstream unit’s target for free cash flow generation for the next 5 years at an average of €1.7 billion/year.
Repsol also noted that its 2015 net profit will drop to €1.25-1.5 billion from €1.61 billion in 2014 caused by low crude oil prices and refining margins.