Repsol to sell $9 billion of assets to raise record dividends
The group will invest 19,000 million until 2027, transfer 10,000 million to shareholders and exchange assets with alliances of 5,000 million and sales of 4,000.
Josu John ImazExecutive Director Repsoltold investors yesterday that He would like to be the “boringest” CEO in the world. Because it means the company is “predictable” and “off script.”
As long as you stay at Repsol,Of course, Imaz will not be able to fulfill his dream. Because the companyIt’s not that it doesn’t embrace the goals of profit or dividends, but that it systematically destroys them.. This follows from new strategic plan for 2024-2027 presented yesterday.
First Spanish oil company intends to make dividend growth one of its main pillars, with a total payout of €10,000 million between now and 2027.between cash payments and share repurchases. Such historical record.
The new roadmap was highly anticipated in the sector. This comes after the previous 2021-2025 plan was significantly exceeded and very early on some of its milestones such as investor remuneration and earnings.
30% more to start with
The new plan starts this year with a payout of €0.9 per share, almost 30% higher than the €0.7 paid in 2023. accrued for 2022. To the 0.40 euros received in January (the first interim dividend of 2023), another 0.5 euros of additional dividends will be added in July (more than the originally planned 0.4 euros).
Then in subsequent years The effective dividend will increase by at least 3% annually, so that in 2027 the dividend will reach one euro per share in 2026.. In 2027 it could reach 1.06 euros. in a “normal” oil price scenario, or even at 1.26 euros if oil rises above 80 euros per barrel.
Generally, Over the four years of the plan, cash allocated for dividends will reach $4.6 billion. Euro.
35% of funds to the investor
Repsol’s goal is allocate 25% to 35% of the cash you receive from your activities (cash flow) to the investor’s remuneration. Not only in cash, but also ransoms.
In the high range, this means raising the target. Previously, it was located only 30%. Stock buybacks are considered another compensation formula because they involve depreciation of the securities, which reduces capital and makes the shares that remain on the exchange worth more.
Also with the share repurchase, Repsol is joining the accelerator this year, announcing up to 40 million items (3.2% of capital). At market price they are worth 580 million euros.. Adding to 0.9 euros per share, shareholders will receive this year an amount equivalent to 1.675 million euros. But this is just a taste of what’s to come.
10 billion
Repsol’s goal is to continue repurchasing shares as it has excess cash, up to a limit of €5.4 billion.. Added to 4.6 billion in cashtotal investor compensation for the entire plan will reach 10 billion euros.
Despite all efforts, Repsol will keep its annual investment volume at an average of around 5 billion euros. Over four years, the company will invest between 16,000 and 19,000 million, of which 35% will be invested in “low-carbon” initiatives.
These investments are “pure”. What does it mean? In fact, Repsol is investing more: between 24,000 and 26,000 million euros. From this gross investment (gross capex) amount, Repsol subtracts the asset turnover required “to optimize capital and finance new investments.”
General, can rotate 9 billion worth of assets in two ways. On the one side “portfolio management”, that is, the sale of non-strategic assets (net sales), cost from 3000 to 4000 millionEspecially in upstream (traditional oil wells). And on the other hand, “asset turnover in GBC” (low carbon generation, i.e. renewable energy sources), totaling between 4,000 and 5,000 million.
US allies
In this item Repsol includes seek allies to include them as partners, always with a share of less than 50%, in certain projectslike he did with Pontegadea (Amancio Ortega) for renewable energy in Spain. Repsol aims to use this formula (known as partnership) intensively in renewable energy in Spain and the USA. $9 billion asset sale does not include listing of subsidiary upstreamthe goal of which remains to list it on the stock market, “preferably in the United States.”in agreement with the fund EIG when he bought 25% of this business. Repsol plans to buy more renewable platforms rather than large existing groups such as Solaria.. And this does not exclude “inorganic” growth upstream.
Up to 3 billion investments awaiting “dialogue” with Ribera
Josue John Imaz, CEO of Repsol, who has had high-profile dialectical conflicts with Teresa Ribera, Minister of Ecological Transition, yesterday extended his hand for reconciliation and “dialogue.”
He said he didn’t want a “lower decarbonization ambition” but rather a “smarter” transition in Europe, leaving room for oil, especially to produce materials such as those needed specifically for the green transition – he cited as example , large high voltage electrical cable. A few weeks ago, Ribera called Imaz, who called for “technological neutrality,” “denial and backwardness.” Imaz also lowered its tone regarding the tax on energy companies. Repsol has threatened to withdraw investment from Spain if the tax continues. Now he sees “change” and “possibility for improvement. Imaz is a little more positive” about the possibility that this tax “could be reformulated.” Repsol supports investment decisions of up to $3 billion in Spain on standby. waiting for this Tax TBD. This follows from the strategic plan. Net investments until 2027 will range from 16 to 19 billion. The difference “is due to the evolution of the regulatory and tax framework.” Repsol yesterday avoided giving specific figures for investment in Spain.
He limited himself to talking about the “Iberian Peninsula”. A possible investment destination outside Spain could be Portugal. The Iberian Peninsula will account for 60% of total investment, and the United States 25%.
In 2027, it will overtake Naturgy in terms of the number of electricity consumers
Repsol’s new plan is called “Developing Our Strengths”. The name couldn’t be flatter. But there’s a big surprise inside: it may be the most ambitious plan in its history. The word “ambition” appears three times. For example, leading the “energy transition.” And numbers that, in context, mean a change in Spain’s energy map. Repsol, which has doubled its number of electricity and gas customers to 2.2 million since 2021, aims to reach four million in 2027. Thus, it will have the same number of electricity consumers as Naturgy. Repsol could take third place as an electricity company after Iberdrola and Endesa. Repsol, which already has 2,800 megawatts of renewable energy in operation and a project portfolio of 60,000 megawatts, aims to reach 10,000 megawatts in 2027. investments in strategic terms – from 2 billion to 4 billion. It must be taken into account that this figure could be doubled as Repsol wants to attract partners to the projects to co-finance the development. The traditional oil exploration and production (E&P) business will attract between 6 and 7 billion euros of investment (30% to 40% of the strategic plan).