Thursday, Jul 28, 2011

--Adjusted net profit falls on lower production in Libya, Argentina

--Libya facilities remain undamaged, ready to resume production

--LNG adjusted operating income climbs fourfold on new production, higher demand

(Adds details on production, Libya, LNG throughout.)

By Ilan Brat

Of DOW JONES NEWSWIRES

MADRID (Dow Jones)--Spanish oil firm Repsol YPF SA (REP.MC) believes its facilities in Libya are undamaged, and the company is ready to resume production there once the country's civil war is resolved, Chief Financial Officer Miguel Martinez said Thursday.

Earlier, the company said the loss of production in the North African country was partly responsible for a 7.3% drop in second-quarter net profit, excluding inventory effects.

The replacement-cost-adjusted net profit, the figure most closely watched by analysts, fell to EUR485 million from EUR523 million a year earlier. This measure, equivalent to the clean replacement cost of supplies, strips out volatile swings in the value of inventories.

Repsol's unadjusted net profit in the quarter was EUR579 million, down 10.9% from EUR650 million a year earlier, but well above the EU424.4 million analysts' consensus estimate compiled by Factset.

Repsol's oil and gas production, excluding its Argentina YPF division where output has long been declining, dropped 12.9% to 296,000 barrels of oil equivalent a day, mainly due to the stoppage in Libya. Total production, including YPF, declined 17% to 742,000 barrels of oil equivalent a day.

In some areas such as the U.S., Repsol is ramping up production. During a conference call with investors, CFO Martinez said that output at the Gulf of Mexico Shenzi field has returned to levels of about a year ago.

Following the disastrous oil spill in the Gulf of Mexico in spring 2010, the U.S. government put a moratorium on deep-water drilling in that area. This order was lifted late last year, but Repsol has only recently managed to return its Shenzi production levels to the more than 30,000 barrels of oil equivalent it was producing there daily in early 2010, Martinez said.

Another bright spot in Thursday's results came from the company's liquefied natural gas business. Adjusted operating income in that division surged more than fourfold to EUR53 million in the quarter thanks to a new plant in Peru coming online last year and rising Asian demand.

At 1246 GMT, Repsol shares were up 1.34% to EUR21.96, above the Ibex-35, which was down 0.03%.

-By Ilan Brat, Dow Jones Newswires, +34-91-395-8125, ilan.brat@dowjones.com

(END) Dow Jones Newswires

28-07-11 1302GMT