Repsol reached a production of 615,000 barrels per day, which represents a decrease of 13.5% compared to the same period last year and 3.8% compared to the previous quarter, mainly due to the United States (Marcellus and Eagle Ford). By region, production fell in all regions compared to 2Q2020, with the exception of Latin America, where it grew by 4.6% to 293,000 barrels of oil equivalent per day. Repsol shows a significant recovery in the average price of the Brent crude barrel in the period from July to September, reaching $42.9 (+44.9% vs. $29.6 on average in 2Q2020). However, this average barrel price for 3Q2020 is 30.8% lower than the same period a year ago. In the case of the average price of the US Texas barrel, it estimates an average price in 3Q2020 of $40.9, 27.5% lower than a year ago, but 46.1% higher than the previous quarter.
On the other hand, the refining margin, an important indicator for the downstream business, averaged a negative $0.1 per barrel in 3Q20. This level reflects the impact of the worldwide uncertainty caused by the coronavirus crisis. This indicator in the previous quarter was $ 3 per barrel, while in 3Q19 it was $ 5.5.
For Banco Sabadell’s analysts, neither the price of crude nor production should come as a surprise. What is striking is this depressed refining margin.
“Repsol has been one of the first in the sector to publish its trading (all will post in this line from now on, although the positive thing is that we are already seeing levels of $ 1-2 in October).
“We did not expect this level and we will have to revise our estimate downwards, but at a consolidated level it will be neutralized by an upstream increase over what was expected and there will be an improvement in the results of Q3’20 compared to the lows of Q2’20.
Despite these levels of refining margins, the truth is that Repsol’s refineries are among the most efficient in Europe. In fact, when the results are published, it will be seen that Repsol is ahead of this indicator. According to Norbolsa’s calculations, it could reach around 0.5 $/b and “therefore, the company can better assume these low margin levels than other installations”.