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Investing.com -- Shares of Galp Energia (ELI:GALP) traded lower on Monday following the company’s fourth-quarter trading update.
Investors appeared cautious despite production volumes and refining margins coming in largely in line with expectations, as concerns over anticipated write-offs weighed on sentiment.
Galp reported production levels of 110,000 barrels of oil equivalent per day (kboed), slightly below consensus estimates of 111,400 kboed.
The marginal dip from the third quarter’s production of 112,000 kboed was attributed to minimal maintenance activity during the quarter.
Refining margins stood at $5.2 per barrel, aligning with market forecasts and reflecting stability in the company’s industrial and energy management operations.
However, analysts at RBC Capital Markets flagged that the company’s disclosure of expected write-offs—estimated to impact results by about €140 million—may have contributed to the market’s subdued reaction.
These write-offs span across various business units, including upstream and commercial/renewable operations, though no impact was reported from its Namibian projects.
Adding to investor unease, Galp noted plans to unwind about €300 million in working capital accumulated during the first nine months of the year. While this move aligns with broader industry trends, it likely raised questions regarding near-term cash flow and financial positioning.
“Operationally, this looks like a neutral release, with both production volumes and refining margins broadly in line with market expectations,” RBC said.
“The year-end round of write-offs is similar to what we have seen from peers through reporting season, and could weigh on numbers, but we would anticipate investors look through this as they are non-cash and non-recurrin,” RBC added.