REPYF - Repsol S.A. (REPYY) Q4 2023 Earnings Call Transcript
2024-02-23 23:29:10 ET
Repsol, S.A. (REPYY)
Q4 2023 Earnings Conference Call
February 22, 2024 03:00 AM ET
Company Participants
Ramon Alvarez-Pedrosa - Head of Investor Relations
Josu Jon Imaz - Chief Executive Officer
Antonio Lorenzo - Chief Financial Officer
Conference Call Participants
Lydia Rainforth - Barclays
Biraj Borkhataria - RBC Capital
Alastair Syme - Citi
Sasikanth Chilukuru - Morgan Stanley
Alejandro Vigil - Santander
Irene Himona - Societe Generale
Pablo Cuadrado - Kepler Cheuvreux
Kim Fustier - HSBC
Henri Patricot - UBS
Giacomo Romeo - Jefferies
Paul Redman - BNP Paribas
Marco Cristofori - Intesa Sanpaolo
Alvaro Navarro - Bestinver Securities
Lydia Rainforth - Barclays
Presentation
Ramon Alvarez-Pedrosa
Good morning, ladies and gentlemen. Welcome to Repsol's '24-'27 Strategic Update. My name is Ramon Alvarez-Pedrosa, Head of Investor Relations. I would like to thank you all for joining us in-person today at our headquarters in Madrid. A warm welcome also to all of you joining us virtually this time. The event will be led by our CEO, Josu Jon Imaz; who is joined by Antonio Lorenzo, CFO; and all members of the executive team.
Just a reminder, all materials being presented today are already available at our website at repsol.com. This is a live streaming event. A replay will be available once the session has finished.
A quick summary of what is being presented today. First, we will discuss the highlights of our fourth quarter and full-year results 2023. Second, we will continue with a deep dive into Repsol strategic guidelines for the period '24, '27. After the presentation, I will be moderating a Q&A session. For those analysts assisting in-person and interesting in asking a question, our Investor Relations team will bring you a microphone. For those analysts joining us online you will able to ask your question using the ask a question tab.
Just to make you aware of the logistics for today's event, the presentation and the Q&A session is scheduled to finish at 12:00 p.m., and this will be followed Spanish wine. We invite you all to stay with us and use this opportunity to talk with our executives, senior management, and Investor Relations team.
And now without further ado, I leave the word to Josu Jon Imaz. Thank you very much.
Josu Jon Imaz
Good morning, everybody, and I really thank you for coming to our headquarters today. I mean I remember that the last time we presented the strategic plan 2020, we were in the worst of the pandemic, November 2020. And let me say that the image was fully different, unfortunately. And also thank you for those that who are following this presentation online by streaming. This is not exactly a strategic plan. Let me say that it is a strategic update.
And I said that it's a strategic update, because the pillars -- the foundations -- the strategic foundations of what is the strategy of the company were presented that in November 2020. And what we are doing now is evolving from this plan. I mean, adapting this plan to a new reality. Our vision about the end of the decade remains unchanged, staying committed in Repsol, with our target of decarbonizing the company of getting net-zero. Remember, that we were the first oil and gas company in the world committing with this target. And also, we are fully committed to take opportunities that we could capture from the energy transition.
On the coming minutes, I'll take you through the details of this update. But before entering and jumping into the update, I'd like to put some light about the performance in 2023 that we presented and released this morning.
Starting at the macro level. Last year was characterized by a volatile, but supportive commodity price scenario. And all that was combined with a quite resilient refining environment. Remember that in our previous call, in the last -- in the third quarter, at the end of October, we expressed and I expressed to use some positive view about last quarter of the year. And I think that this scenario we had confirmed in some way that view.
Brent oil averaged $84 in the last quarter of the year, 5% lower than in the same period a year ago. Price continued to be pressured by concerns on demand, high inventories, and the strong U.S. supply. But on the other side, we have all the geopolitical tensions in the Middle East that in some way, were adding further volatility to this price. For the full-year, Brent averaged $83 a barrel, roughly 19% below 2022.
In the gas market, Henry Hub averaged in the fourth quarter $2.9 per million BTU, 54% below the same period in 2022. And this price was negatively impacted by record production levels in the U.S. and high inventories. In the full-year, the Henry Hub averaged $2.7, a 59% decrease from the levels of 2022. Repsol's refining margin averaged $9 per barrel in the first quarter. That was, remember, in line with our expectations. Remaining at very healthy levels, thanks to sustained middle distillate spreads and strong, of course, is not very useful this season, gasoline trucks. As of today -- no, sorry, last year, in 2023, the indicator was $11.1 per barrel. Finally, by the end of the year, the dollar lost some ground, in anticipation of interest rate cuts in the U.S., putting the average for the whole year in $1.08 per euro.
Jumping now into the upstream. Our business kept its focus on efficient execution of growth projects and portfolio transformation, emphasizing sustainability and profitability per barrel. Fourth quarter adjusted income was €554 million, 7% lower than in the last quarter of 2022, mostly due to lower realization on prices. That was partially offset by a higher production and lower taxes....
Repsol, S.A. (REPYY) Q4 2023 Earnings Call Transcript