Repsol YPF SA : Repsol presents its 2012-2016 Strategic Plan
05/29/2012| 12:25pm US/Eastern
Investing 19.1 billion euros in the period
Repsol presents its 2012-2016 Strategic Plan
The group's strategy rests on four pillars: high
growth of Upstream, maximizing the return of
Downstream and LNG (liquefied natural gas), financial
strength and competitive compensation to
To aid the execution of the plan and based on the
future growth of the business units, the company will
reinforce its organizational structure by naming a
Director General for the Business Units and a
Director General for Strategy and Control.
The plan is based on the investment of more than 19
billion euros, financed by the group's cash
generation. The Upstream unit will drive growth,
representing almost 80% of the group's total
investment over the period.
Repsol's production will grow at an annual rate
of 7% to reach 500,000 barrels of oil equivalent a
day in 2016, with a reserve replacement rate
exceeding 120% for the period.
Upstream activity will be centred on 10 key growth
projects, including some of Repsol's greatest
exploratory successes of the previous years in
Brazil, United States, Russia, Spain, Venezuela,
Peru, Bolivia and Algeria.
Repsol's presence in several of the world's highest
growth areas in exploratory potential and its
established capacity as a deepwater explorer have
transformed Repsol into one of the energy companies
with best growth prospects.
The Downstream unit becomes a cash generator,
following the completion of the assets' investment
cycle, which will entail a 50% reduction of
investment to an average of 700 million euros a year.
The expanded Cartagena and Bilbao refineries increase
Repsol's refining capacity and allow a margin
improvement of approximately $3 per barrel for the
entire system. The unit's free cash flow will be an
annual average of 1.2 billion euros.
The high profitability of the LNG assets will enable
return on capital following the completion of the
investment cycle in the asset portfolio.
The plan envisages group net income will grow 1.8
times, excluding YPF.
Repsol's solid financial position and the divestment
of non-core assets will enable the company to finance
the investments envisaged in the 2012-2016 strategic
plan, while also generating cash of between 8.1 and
8.6 billion euros for debt reduction and dividends.
Repsol will carry out selective divestments of
non-core strategic assets worth between 4 and 4.5
The strategic plan was presented in Repsol's new
corporate headquarters. Repsol's new campus is
the only business park located in the centre of
Madrid and is one of the city's most sustainable
and modern buildings.
Repsol Executive Chairman Antonio Brufau today presented
the company's new strategic plan today to
journalists, analysts and investors, laying out the main
growth lines for the coming years.
Repsol's 2012-2016 strategic plan includes an
ambitious investment program of over 19 billion euros,
self-financed with the company's own cash generation
and divestments in non-strategic assets and which ensures
adequate return to its shareholders.
The company also plans to almost double its net profit in
the next five years from 2011, excluding YPF, through
activity in the Upstream unit and cash generation from
the Downstream and the LNG business units.
The plan, which builds on Repsol's strengths,
envisages a 1.9-times increase in operating profit from
that posted in 2011, excluding YPF.
The Exploration and Production unit is the company's
growth engine, with investment focused on exploration and
10 key growth projects, including some of the biggest
exploration successes obtained by Repsol in recent years.
The company will focus its activity on these ten projects
in Brazil, United States, Russia, Spain, Venezuela, Peru,
Bolivia and Algeria.
The Upstream area will require an annual investment of
2.9 billion euros, approximately 80% of the total
investment envisaged by the Repsol Group in the strategic
The development of these projects will result in an
annual production growth rate of 7% to reach 500,000
barrels of oil equivalent per day in 2016. These
production levels will drive an increase in reserves
which will place the average replacement rate above 120%
in the period.
Repsol's presence in several of the geographic areas
with greatest potential in the world, and its recognised
capacity in deepwater exploration, has positioned the
company among those with the best growth prospects in the
Repsol's liquefied natural gas (LNG) business will
take advantage of integration across the entire value
chain and the flexibility of the business to maximize the
profitability of Repsol's strong asset portfolio in
the Atlantic and Pacific basins.
The Downstream area (Refining, Marketing, Chemicals and
LPG) becomes a cash-generating business, following the
completion of its asset investment cycle. Operational
expansion projects in the Cartagena and Petronor (Bilbao)
refineries will raise the refining margin by about $3 per
barrel in 2016, in addition to increasing the refining
capacity and production of middle distillates in a market
where there is currently a deficit of these
Repsol's excellent downstream assets and their
geographical situation will allow the company to maximize
the return on the investments made in the last business
cycle and in cash generation, making this business one of
the most competitive in the sector.
The 2012-2016 strategic plan envisages increasing the
unit's profits through operational excellence,
efficiency, and exploiting high-value options for growth
with reduced capital needs. Thus, investments in this
business segment shrinks by 50%, down to an average of
700 million euros a year over the period.
New Management Structure to support growth
To aid the execution of the strategic plan and focusing
on the future vision, the Board of Directors approved, at
the behest of the Chairman, a new management structure to
reinforce its corporate and business areas.
To help the growth of the businesses, management will be
concentrated in the Business General Direction led by
Nemesio Fernandez-Cuesta as Chief Operating Officer.
To boost the active development of the company's strategy
based on the anticipation of opportunities, business
management and the growth of technology as a
transformational engine, the company has created a
General Direction for Strategy and Control, led by Pedro
ˇThe new structure reinforces management by incorporating
to the Executive Committee the new Executive Directors
for Exploration and Production, (Luis Cabra), and
Industrial and New Energy Unit (Josu Jon
Repsol's new Executive Committee is made up of:
Antonio Brufau, Executive Chairman
Luis Suárez de Lezo, General Counsel and Secretary of
the Board of Directors
Nemesio Fernández-Cuesta, Executive Director Business
Pedro Fernández Frial, Executive Director Control and
Miguel Martínez San Martín, Chief Financial Officer
Cristina Sanz Mendiola, Executive Director People and
Begońa Elices, Executive Director Communication and
Luis Cabra, Executive Director Exploration and
Josu Jon Imaz, Executive Director Industrial and
New Energy Unit
Renewed corporate image
Repsol has transformed and revitalized its corporate
image wit a twofold objective: Gaining visibility as well
as reflecting the company's new vision.
This project, was carried out by Repsol employees as well
as external public, providers, image experts, investors,
journalists and opinion leaders and is the result of a
rigorous process which began in 2011
The rollout of the new image, which begins today with the
presentation of the strategic plan, will be completed in
the coming months not only in group communications but
also at service stations, products and services and all
areas inside and outside Spain.
The new company headquarters built to the most stringent
sustainability criteria is one of the first examples of
the application of the new brand.
This document does not constitute an offer or
invitation to purchase or subscribe shares, in
accordance with the provisions of the Spanish
Securities Market Law (Law 24/1988, of July 28, as
amended and restated) and its implementing
regulations. In addition, this document does not
constitute an offer of purchase, sale or exchange,
nor a request for an offer of purchase, sale or
exchange of securities in any other
This document contains statements that Repsol
believes constitute forward-looking statements
which may include statements regarding the intent,
belief, or current expectations of Repsol and its
management, including statements with respect to
trends affecting Repsol's financial condition,
financial ratios, results of operations, business,
strategy, geographic concentration, production
volume and reserves, capital expenditures, costs
savings, investments and dividend payout policies.
These forward-looking statements may also include
assumptions regarding future economic and other
conditions, such as future crude oil and other
prices, refining and marketing margins and exchange
rates and are generally identified by the words
"expects", "anticipates", "forecasts", "believes",
estimates", "notices" and similar expressions.
These statements are not guarantees of future
performance, prices, margins, exchange rates or
other events and are subject to material risks,
uncertainties, changes and other factors which may
be beyond Repsol's control or may be difficult to
predict. Within those risks are those factors and
circumstances described in the filings made by
Repsol and its affiliates with the Comisión
Nacional del Mercado de Valores in Spain, the
Comisión Nacional de Valores in Argentina, the
Securities and Exchange Commission in the United
States and with any other supervisory authority of
those markets where the securities issued by Repsol
and/or its affiliates are listed.
Repsol does not undertake to publicly update or
revise these forward-looking statements even if
experience or future changes make it clear that the
projected performance, conditions or events
expressed or implied therein will not be
The information contained in the document has
not been verified or revised by the Auditors of