MADRID (Reuters) - Spanish energy giant Repsol plans to buy and sell more assets in a drive to get stronger in a smaller number of markets, its CEO said on Thursday, after weak energy prices prompted it to cut capital spending and core profits forecasts.
CEO Josu Jon Imaz said the company now expected capital spending (capex) for 2018-2020 to be 12.5-13.5 billion euros ($13.9-15.0 billion), including 500 million euros on renewable energy assets. That is down from 15 billion euros previously.
“Our geographical scope is not the right one,” Imaz said, “We have to reduce the scope of the countries where we operate, and become more active in M&A.”
He said the company would reduce its presence in the countries where it is smallest, without giving details.
Though weak energy prices dragged down Repsol’s third quarter adjusted net profit, it still beat market expectations thanks to downstream businesses such as refining and marketing.
Repsol stock was up 1.8% at 15.215 euros in afternoon trade.
Oil prices have been under pressure this year due to rising supply from the United States and expectations that slowing economic growth and trade disputes will weigh on demand.
Repsol trimmed its 2019 core earnings forecast to 7.5 billion euros from 7.8 billion previously, and also lowered its production forecasts for 2019 and 2020.
This year, the company plans to produce 710,000 barrels per day (bpd), down from 720,000 previously. It expects to be somewhere between 720,000 and 750,000 bpd next year.
“We will prioritize price versus production,” Imaz said.
The oil and gas firm reported net income of 522 million euros in the three months to the end of September, down 11.2% on the same period last year. Analysts had expected net income of 479 million euros, according to a poll provided by the company.
The downstream unit, which includes refining, marketing and liquefied petroleum gas businesses, reported a 10.7% rise in quarterly adjusted net income, helped by a rise in refining margins in Spain from the previous quarter.
Repsol bases its targets on an oil price of $50 a barrel. The average selling price for a barrel of its oil was $55.3 in the quarter, compared with $66.9 the year before.
Editing by Ingrid Melander and Mark Potter