Edited from: Repsol YPF's 2009 strategic plan annual report
A presentation held by Repsol's chairman and chief executive officer, Antonio Brufau, outlined the company's strategic plans. The plan, defines the company's principal operating areas for the mentioned period, and is based on three fundamental premises: growth, transformation of portfolio and profitability.
Growth
Repsol will implement a strategy of profitable growth for all of its businesses, based on the optimisation of existing projects, the development of new projects, and the analysis of possible business opportunities in areas of interest to the company.
Upstream will be the main driver behind Repsol's growth, concentrating the largest part of the company's investments - primarily in the exploratory basins of North Africa, Caribbean, Middle East, US and Western Africa and intensifying its exploration activities via the drilling of more than 160 new wells, of which another 40 plus wells in Argentina, Brazil and Bolivia (ABB) are said to be needed.
Within the upstream growth plan, Repsol will increase its commitment with respect to the assets related to the production of natural gas, especially LNG and in particular the integrated projects of Gassi Touil in Algeria, Persian LNG in Iran, and the Caribbean (Venezuela, Trinidad and Tobago). In that context, the company will take advantage of business opportunities and economies of scale resulting from the Gas Natural SDG joint venture.
Repsol believes that as a result of these new projects, and possible acquisitions in strategic areas for the company, at the end of the 2009 period Repsol's total oil and gas production will grow by 13.6% to 1.31m bbl/day.
Repsol states that downstream (which includes chemicals) it will contribute solid growth and stable cash flow for the company. With respect to refining, which is said to be a strong cash flow generator for the company, Repsol will take advantage of its 'leading position' in growth markets such as Spain and Portugal, as well as having invested in recent years to improve its conversion capacity, and anticipating the increase in the global demand for diesel.
Transformation of portfolio
Within the strategic plan it is outlined that the fundamental element of managing its portfolio of assets, with the goal of concentrating investments in areas of activity and geographical zones of high value, and also includes active divestment in zones or business activities that are considered non-strategic.
In this period, Repsol will invest a total of Euro21bn (of which over half will correspond to exploration and production projects) and at the same time it will divest Euro1.5bn, which will be destined toward financing new projects that the company determines as being of high interest.
Profitability
Repsol's strategic plan forecasts cost savings of Euro1.2bn. The target will be obtained primarily by reducing the corporate structure by 25%, as well as other factors such as the optimisation of the company's logistics and greater energy efficiency. During the plan, Repsol will increase and continue its financial discipline.
To achieve this goal the company will maintain a financial structure that will permit the maximum flexibility at the lowest cost, while at the same time granting profitability and earnings per share (eps) growth. All of this will contribute to the final objective, which is to guarantee sustainable dividend growth for its shareholders.
Repsol's strategic plan 2009 key points:
Upstream to be driver behind company's growth;
Downstream to be stable cash-flow generator;
Portfolio to be transformed via investments and divestments;
Total investments to surpass Euro21bn;
Investments to be concentrated in North Africa, Caribbean, Atlantic Basin and the Middle East;
In Argentina new opportunities will be taken advantage of in the area of exploration of offshore blocks, and competitive advantages in refining and marketing;
Divestment of Euro1.5bn in non-strategic areas and businesses;
Intensify exploratory activity drilling 200 new wells;
Reserves in North Africa to grow by 170%;
Euro1.2bn in cost savings;
Strategic alliance with Gas Natural to have cost savings of Euro10m/year; and
Returns on average capital employed (ROACE) to be 12%.
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Financial highlights: Repsol, year ended 31 December
|
|
2007 |
2006 |
2005 |
2004 |
2003 |
|
Sales (€ m) |
55,923 |
55,080 |
51,045 |
40,292 |
37,206 |
|
Operating Profit (€ m) |
5,808 |
5,911 |
6,161 |
4,686 |
3,860 |
|
Net Profit (€ m) |
3,188 |
3,124 |
3,120 |
2,414 |
2,020 |
|
Total Assets (€ m) |
47,084 |
45,201 |
45,782 |
-- |
-- |
|
Number of Employees |
36,000 |
36,931 |
35,909 |
32,376 |
30,644 |
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Repsol YPF
Company Structure
Repsol YPF is an oil, chemical and gas company, carrying out activities in exploration and production, refining, distribution and marketing of chemicals, natural gas and electricity. In 1999, Repsol acquired 97.5% of YPF, a leading company in Argentina and one of the largest in Latin America. YPF is engaged in exploration, production, refining and marketing of oil, and petrochemical activities. In June 2007, the board of Repsol-YPF approved the creation of two new divisions, which are part of a larger organisational change.
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