Repsol writes down $1.5bn in assets as Covid-19 saps demand
The Spanish energy firm said the writedown is based on lower oil price assumptions for 2020 and 2021 of $43 and $49 a barrel, respectively
Madrid — Spain’s Repsol posted a net loss and wrote down $1.5bn in assets on Thursday as it presented new expectations for oil and gas prices, following most peers in lowering its projections.
The demand-sapping Covid-19 crisis has piled pressure on a sector already hurt by oil prices that have been dragged down by tension over supply and a shift to low-carbon energy sources.
BP, Shell and Eni have all written down the value of assets on their balance sheets recently.
Repsol said it now expects Brent crude oil prices to average $59.60 a barrel at today’s prices between 2020 and 2050. It had previously forecast Brent crude to reach $87 a barrel by 2035, adjusting for inflation, higher than most of its rivals’ headline numbers.
The writedown is based on lower oil price assumptions for 2020 and 2021 of $43 and $49 a barrel, respectively.
A company spokesperson said the longer-term change was entirely due to the new calculation being based on current prices.
Different inflation baselines and timelines are used to estimate the direction of oil prices, but Repsol’s change leaves Equinor an outlier, with its forecast $80 a barrel in 2030, in 2019 prices.
Repsol said it would buy back shares and present a new plan in November based on a goal to reduce carbon emissions to net-zero by 2050, after posting a quarterly loss of €1.997bn, which came in better than analysts had expected in adjusted terms.
The company revised down its gas price outlook for 2020 to $2 per million British thermal units, from $3.
Provisions brought the total writedown to €1.44bn.
The company burnt cash, with a negative free cash flow of €217m, but said it expects cash flow from operations of €3.6bn this year.
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