Portugal’s Galp lifts core profit target as refining margins soar

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Portugal’s Galp lifts core profit target as refining margins soar

12:52 CAT | 31 Oct 2023

File photo: Reuters

Quarterly net profit rises 12%, misses forecasts due to taxes

Adjusted EBITDA increases 35% with strong midstream performance

Portuguese oil company Galp Energia on Monday lifted its core profit target for the year as a widening refining margin offset a decline in output following the sale of its Angolan fields and lower oil prices.

It reported a 12% rise in net profit to 210 million euros ($222 million) in the third quarter, less than the 241 million euros expected by analysts, as taxes rose 38% to 434 million euros, “including 76 million euros from extraordinary Iberian taxes”.

Galp shares were down 1.76% in afternoon trading.

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) – also known as core profit – rose 35% to 1.06 billion euros, thanks to a 90% jump in refining margins to $14.6 per barrel in the quarter, it said in a statement.

As a result, the company lifted its EBITDA target for the year to “more than 3.5 billion euros” from previous guidance of 3.2 billion euros. The company booked 2.84 billion euros in EBITDA in the first nine months.

The refining business’ adjusted EBITDA soared to 342 million euros in the quarter from 48 million a year earlier, offsetting the effect of the disposal of Angolan fields and lower oil prices on overall EBITDA. The oil and gas extraction business’ adjusted EBITDA fell 3% to 594 million euros.

Galp’s share of oil and gas production from projects in which it has a stake fell 2% to 125,000 barrels of oil equivalent per day (boepd) in the quarter, while Brent oil prices fell to an average of $86.7 per barrel from $100.8 a year earlier.

On a comparable basis, production was up 8%, “supported by the ramp-up of (the) Coral Sul floating liquefied natural gas” (FLNG) production unit in Mozambique and stable production in Brazil, at 116,200 boepd.

At 8,900 boepd, Coral Sul was “close to expected plateau levels”, Galp said.

Chief Executive Filipe Silva said Coral Sul partners were discussing a second FLNG there, but Galp, which has a 10% stake in the consortium led by ENI, wanted to de-risk as much as possible and focus on the project’s onshore modular trains.

“Mozambique is a jewel of a project … we are discussing within the consortium that project as we speak, it would be a copycat of Coral Sul. It is a live situation, but Galp is very focused on the onshore project”, he told a conference call.

Galp also expects to drill two back-to-back wells in Namibia, the southern African country that has attracted strong interest from global oil companies after Shell and TotalEnergies made discoveries off its coast.

Source: Reuters