Banco Sabadell | According to press reports, a Brent price above $80/barrel, coupled with political change in Venezuela, opens up the opportunity for Repsol to recover investments in the country and move forward with a possible IPO of its upstream business through a reverse merger with US mid-caps. In its annual report, Repsol estimates the ‘recoverable’ funds in Venezuela at €4.55 billion (21% capitalisation), of which €963 million remain active and the rest are provisioned, after reducing its equity exposure to €276 million.
As for the liquidity event that Repsol could undertake in 2026/27, there is speculation about a reverse merger with a US-listed company with a lower capitalisation than Repsol upstream. Several options are being considered in the market, such as Apache, Devon, Murphy, Chesapeake, Talos and Kosmos.
Assessment: Positive news, although already known. As for the potential recovery of investments in Venezuela (PDVSA loans and invoices), this will not be an easy or immediate process. We recall that Repsol had offered to triple its crude oil production in the country over the next two to three years, from 45 Kboe/d to 135 Kboe/d, provided that an adequate legal and commercial framework is guaranteed, given the regulatory risk and the current lack of legal certainty.
As for the liquidity event, this is not new either. In November, there was speculation about the possibility of talks with Apa Corp, which, of all the companies mentioned, would make the most strategic sense due to its size (lower capitalisation than Repsol and upstream contribution). Devon and Expand (formerly Chesapeake) would be too large, while Murphy and Talos would be too small.
In any case, at the next CMD (10 March), we expect a little more visibility in relation to both Venezuela and the potential liquidity event.
