MercoPress. South Atlantic News Agency

Repsol confirms Argentine partners for YPF subsidiary

Spanish oil company Repsol YPF is interested in finding a local minority partner in its Argentine YPF subsidiary, Repsol YPF president Antonio Brufau said at a company shareholder meeting. The stake could be from 15-20% of YPF, which is valued at roughly 18 billion US dollars.

"In Argentina, it would be good if we had partners - private businessmen who respond to the philosophy of transparency in business, ethics and entrepreneurial values, like those at Repsol - because they could accompany us in this growth process," Brufau said. Repsol YPF has begun conversations with various Argentine companies, Brufau said, declining to provide names of possible buyers. Brufau also declined to establish a date for the possible divestment. In Buenos Aires Miguel Martinez, Repsol's Director of Corporate Development revealed conversations with an Argentine group for the sale of 25% of the subsidiary, "but that's all I can say because of confidentiality clauses". According to current estimates the operation would involve 4 billion US dollars. YPF posted January-March net profits of 1.20bn pesos (390 million US dollars), down 13.6% from 1.39bn pesos in January-March 2006. Brufau highlighted that some main strategic objectives for upstream development in Argentina are maintaining production levels, offshore exploration and its development plan for Argentine fields (Plada). Repsol YPF's Plada plan involves the development of higher-risk projects such as tight gas, heavy crude, tertiary recovery methods and deepwater, beginning in about 2009 According to Spanish political sources President Rodríguez Zapatero supports Repsol YPF initiative to open the YPF subsidiary to Argentine partners. "This is part of the special strategic relation between Spain and Argentina promoted by Rodriguez Zapatero and President Kirchenr". In related news Repsol YPF this week announced postings of net income of 888 million euros for the first quarter of 2007, 3% higher than same period last year. This increase, the company said, was attained in spite of a drop in international crude oil prices, --a decrease of more than 4 USD/barrel with respect to the same quarter of the previous year--. The company also cited the negative effects on its earnings of the revaluation of the Euro versus the dollar. At the end of the first quarter of 2007, Repsol YPF's net debt was situated at 4,426 million Euros, representing a slight increase of 30 million Euros with respect to the close of 2006. The net debt to capitalization ratio was situated at 16.5% with reduction of 2.9% with respect to the amount reported in December 2006. The investments realized in the first quarter of 2007 amounted to 1,377 million Euros, fundamentally in the areas of exploration and production (1,048 million Euros) and refining and marketing (215 million Euros). Total hydrocarbon production for January-March of 2007 attained 1,084,500 barrel equivalent per day, 4% less than first quarter of 2006. This reduction was principally due to lower production in Venezuela as a consequence of the migration of Operating Contracts to Mixed Companies and lower production of liquids in Argentina due to declining fields.