📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Repsol Sells 25% Stake in Upstream Unit to EIG, Aims for U.S. Listing

Published 07/09/2022, 07:34 pm
© Reuters.

By Geoffrey Smith 

Investing.com -- Repsol (BME:REP) is to sell a 25% stake in its upstream oil and gas business to U.S. investment group EIG, unlocking capital that it will redeploy in a transition to greener energy.

Spain's biggest oil and gas producer said it will receive $4.8 billion for the stake, valuing its total upstream business at $19 billion. The sale is the first part of a strategy under which Repsol will distance itself from its traditional hydrocarbons business, aiming to reduce its net carbon emissions to zero by 2050. The strategy foresees a possible listing for the business in the U.S. from 2026 onward, subject to market conditions.

"This pioneering agreement allows us to maintain the strategic direction of the upstream unit and, at the same time, to boost the transformation of the company and its multi-energy profile to achieve zero net emissions by 2050," Repsol CEO Josu Jon Imaz said in a statement.

Repsol is primarily a producer of natural gas, which accounts for around 70% of its total daily output of 570,000 barrels of oil equivalent. The sale comes at a time when upstream producers are riding high due to the sharp rebound in global energy demand after the pandemic, and the phenomenal squeeze on prices created by Russia's invasion of Ukraine and the West's response in the form of sanctions.

The valuation of the deal suggests that the market attributes little or no value to the rest of Repsol's businesses at the moment. Its total market capitalization at Monday's close was under $19 billion.

Repsol intends to keep a majority stake and operational control of the business. Repsol will appoint four directors to the eight-person board, including the chairman with a casting vote. EIG will appoint two board members and the other two will be independent directors.

By 04:00 ET (08:00 GMT), Repsol stock in Madrid was down 1.2%, underperforming both the Spanish benchmark IBEX 35 index and its European oil and gas peers.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.