Repsol Cuts Dividend Payout Ratio After YPF Nationalization
05/29/2012| 03:52am US/Eastern
Spanish oil company Repsol YPF SA (>> Repsol YPF SA) said Tuesday it would cut its dividend payout ratio in a bid to conserve cash after the nationalization of its Argentine unit.
Repsol's dividend payout ratio through 2016 will fall to a range of 40% to 55%, from a previous range of 50% to 60%, the company said in a presentation filed with Spain's market regulator.
Since Argentina nationalized 51% YPF SA (YPF), the country's leading oil-and-gas company, leaving Repsol with 6.4% in early May, Repsol's management has said it would work to protect the company's investment-grade credit rating.
The news about trimming the dividend payout projection is one of several measures the company said it would deploy to conserve cash. Repsol also said it could divest some operations and sell assets, including the 5% of its own shares the company holds.
At the same time, the company's management dramatically increased its compound annual growth target for production to at least 7% through 2016, up from a previous target of 3% to 4%. The augmented production will also help the company boost its cash flow, which the company said would reach a range of EUR8.1 billion to EUR8.6 billion.
Repsol said its daily output would reach 500,000 barrels of oil-equivalent by 2016. In 2016, excluding YPF, Repsol's daily output was about 300,000 barrels of oil equivalent.
The company added that its strategy will be self-financed, meaning that Repsol plans to take on no more debt to fund it.
-By Ilan Brat, The Wall Street Journal, +34 913 958125, email@example.com