Earnings call transcript: Repsol Q1 2025 shows resilience amid market volatility

Repsol SA reported its Q1 2025 earnings, revealing an adjusted income of €651 million, a 1% increase from the previous quarter. The company’s financial performance was marked by a cash flow from operations reaching €1.6 billion and a net debt increase to €5.8 billion. Despite market volatility, Repsol’s integrated business model demonstrated resilience, maintaining a healthy P/E ratio of 7.54 and an impressive dividend yield of 7.31%. According to InvestingPro analysis, Repsol appears undervalued based on its Fair Value estimates, with strong financial health scores. The stock price showed a decrease of 1.43% to €10.84, reflecting investor caution amid geopolitical tensions and fluctuating oil prices.

Key Takeaways

• Repsol’s adjusted income rose by 1% from Q4 2024, hitting €651 million.
• Cash flow from operations reached €1.6 billion, supporting strategic investments.
• The stock price fell by 1.43% in pre-market trading, reflecting market uncertainty.
• Repsol maintained its 2025 guidance despite challenging market conditions.
• The company is pursuing asset rotations and joint ventures to bolster growth.

Company Performance

Repsol’s Q1 2025 performance reflected its strategic focus on maintaining operational efficiency and competitiveness. The company reported a slight increase in adjusted income, underpinned by its diversified upstream portfolio and strategic asset management. With a market capitalization of $14.17 billion and a robust current ratio of 1.36, Repsol maintains a strong financial position. InvestingPro data reveals the company has maintained dividend payments for 34 consecutive years, demonstrating long-term stability. Despite a challenging market environment with volatile oil prices and geopolitical tensions, Repsol’s integrated model proved resilient.

Financial Highlights

• Adjusted income: €651 million (1% increase from Q4 2024)
• Cash flow from operations: €1.6 billion
• Organic CapEx: €1.2 billion (lowest since Q1 2023)
• Net debt: €5.8 billion (€800 million increase since December)

Outlook & Guidance

Repsol remains committed to its 2025 guidance, projecting cash flow from operations between €5.5 billion and €6 billion. The company plans to keep net CapEx between €3 billion and €3.5 billion and aims for €2 billion in asset disposals and rotations. A minimum share buyback of €700 million is also planned, highlighting Repsol’s focus on returning value to shareholders. InvestingPro subscribers can access detailed analysis of Repsol’s financial health, which currently rates as GOOD, along with 6 additional exclusive ProTips and comprehensive valuation metrics in the Pro Research Report.

Executive Commentary

CEO Josu Jon Imaz emphasized the company’s resilience, stating, "Repsol’s integrated model has demonstrated resilience in similar situations." He also assured investors, "Even in a stress scenario, we maintain the guidance for the year." These statements underscore Repsol’s confidence in navigating market challenges.

Risks and Challenges

• Geopolitical tensions and OPEC policies continue to create market volatility.
• Fluctuating oil and gas prices could impact revenue and profitability.
• Regulatory changes, particularly in the US and UK, may affect operations.
• Economic slowdowns in key markets could hinder demand for energy products.
• Supply chain disruptions remain a potential risk to operational efficiency.

Q&A

During the earnings call, analysts inquired about the potential impacts of US tariffs and the accounting of the UK joint venture. Repsol detailed its hedging strategies for US gas production and clarified the contributions of its efficiency program. The company also addressed questions regarding potential production growth, emphasizing its strategic initiatives to drive future expansion.

Full transcript - Repsol SA (REP) Q1 2025:

Conference Operator: Hello, and welcome to the Repsol’s Third Quarter twenty twenty five Results Conference Call. Today’s conference will be conducted by Mr. Justyon Imaz, CEO, and a brief introduction will be given by Mr. Pablo Banatine, Head of Investor Relations. I would now like to hand the call over to Mr.

Banatine. Sir, you may begin.

Pablo Banatine, Head of Investor Relations, Repsol: Thank you, operator, and good morning to all. Welcome to Repsol First Quarter twenty twenty five Results Presentation. Today’s conference call will be hosted by Josu Jonimov, our Chief Executive Officer, with other members of the executive team joining us as well. Before we start, let me draw your attention to our disclaimer. During this presentation, we may make forward looking statements based on estimates.

Actual results may differ materially depending on a number of factors as indicated in the disclaimer. I will now hand the conference call over to Jose O’Gionyman.

Josu Jon Imaz, Chief Executive Officer, Repsol: Thank you, Pablo. Good morning to everyone, and thank you for joining us. I know that today is a busy day for you, for the analysts covering our sector, so I’ll try to be as executive as possible. Our presentation will be focused on first quarter performance, but at this stage, we can’t overlook the sharp turn of events in April and how Repsol visualize this complex environment. Of course, the end, we will be available as always for a Q and A session.

Starting with the main messages, the first quarter of twenty twenty five was marked by significant volatility driven by the headlines about OPEC’s production policies, U. S. Tariffs and geopolitical tensions. Overall, the primary macro indicators were in line with our assumptions, enabling us to achieve our financial result consistent with guidance and to make material progress towards the priorities defined for 2025. Of course, all that volatility intensified in April, turning oil prices towards their lowest point in four years and deteriorating the refining environment.

Repsol’s integrated model has demonstrated resilience in similar situation, but nevertheless, the company is already working on adapting its plan if these circumstances persist. In this context, Repsol keeps advancing towards its strategic goals, having improved its Upstream portfolio with a new joint venture in The UK, taking new steps on the development of its business model for renewables and fulfilling its committed shareholder distribution targets. In the Upstream, the agreement with Neo Energy to merge our UK North Sea assets aims to create one of the largest operators in the region, enhancing the scale, efficiency and growth prospects of the combined entity. In Renewables, we complete our fifth asset rotation in Spain, and we have validated our growth strategy in The U. S, completing our first rotation there.

Regarding shareholder distribution, the first buyback program of 2025 was implemented in March with the aim of reducing our share capital equivalent to EUR $350,000,000 before the July. And subject to the approval by our next AGM to be held In a month, we confirm the payment of €0.5 per share as a second dividend of 2025, and we announce a payment of another €0.5 per share for January 2026. Looking at the quarterly results, adjusted income was €651,000,000 and 1% increase over the fourth quarter of twenty twenty four. Cash flow from operations, excluding working capital movements, amount to EUR 1,600,000,000.0. Organic CapEx was EUR 1,200,000,000.0, the lowest level since the first quarter of twenty twenty three.

Net CapEx after disposals and rotations stood at EUR 1,000,000,000. Out of the EUR 2,000,000,000 of disposals expected for 2025, we have already announced EUR 700,000,000.0, of which EUR 400,000,000.0 have been cashing with the remaining EUR 300,000,000.0 to be received later in the year. We have to add to this figure the tax equity component of the project Pecos that is going to increase this figure to EUR 800,000,000.0. Net debt closed at EUR 5,800,000,000.0, an increase of EUR 800,000,000.0 since December. This rise was driven by a seasonal increase of working capital, the shareholder remuneration that is usually concentrated in the first quarter and the cash out of the Bunge transaction.

Looking now at the main macroeconomic indicators of the quarter. Starting with oil. Despite the change in the market dynamics, prices remained consistent with the previous quarter. Brent crude averaged $76 per barrel, a 1% increase compared to the fourth quarter in 2024. Gas prices in The U.

S. Maintained their upward trend, helped by cold weather and LNG exports. Henry Hub averaged $3.7 per million BTU, a 32% increase over the previous quarter. In Europe, the effect of a colder winter could offset the significant LNG flows coming into the continent. Repsol’s refining margin indicator averaged $5.3 per barrel, a 10% increase over the last quarter of twenty twenty four, driven by stronger middle distillate differentials, mostly of diesel spreads.

The exchange rate averaged $1.05 per euro. However, uncertainty around the commercial policies led to a recovery of European currency towards the end of the period, closing at $1.08 In the Upstream division, first quarter adjusted income was EUR $558,000,000, 3 percent higher year over year, driven by higher gas realization and lower costs, partially compensated by lower production. Production average 550,000 barrels equivalent per day, three percent lower quarter over quarter. The higher contribution from Libya and Marcellus was offset by divestments, natural decline and mainly by maintenance activity in The UK. Currently, we are producing around 560,000 barrels per day after overcoming the maintenance turnaround, intense turnaround we had in our assets in the North Sea in The UK.

In Libya, net production averaged 38,000 barrels per day after the connection of new wells and allowing us to reach our maximum production level since 2019. In unconventional, the production hedges in place for 2025 and 2026 ensure activity levels in this volatile scenario. This hedging strategy has been extended into 2027, having already covered 12% of our gas volumes that year, I mean, through a zero cost collar structure. In The UK, the strategic agreement with Neo UK marks another step in the optimization of our portfolio. Repsol will hold a 45% stake in the combined entity and completion of a transaction is subject to the customary conditions for this transaction.

The new jointly controlled entity named NIO Next aims to create one of the largest independent producers in The UK continental shelf with a projected production of 130,000 barrels per day in 2025. Its large and diverse portfolio will enable the new company to continue delivering operational efficiencies while pursuing organic growth, targeting synergies of more than $1,000,000,000 enhancing cash flow generations and returns. Repsol will retain a funding commitment up to a nominal amount of $1,800,000,000 of the commission liabilities related to its legacy assets. This amount doesn’t imply a higher exposure of Repsol. Our focus on improving our upstream portfolio includes the efficient delivery of the key transformation projects currently under development.

Before the end of twenty twenty five, we expect four start ups contributing with lower breakeven and lower emission barrels to our production current volumes. In Trinidad And Tobago, the Cyprie project reached first gas earlier this month. Peak production is expected in 2026, and it will contribute 19,000 net barrels equivalent per day to Repsol. In The Gulf, Leon Castile remains on track to start production in August. And in Brazil, the Lapa Southwest project advanced towards beginning production in November.

In Alaska, the first phase of PIKA is scheduled to achieve first oil before year end. In the Industrial Division, first quarter adjusted income was EUR 131,000,000, which compares with a result of €731,000,000 in the first quarter of twenty twenty four, mainly due to a lower contribution from refining. Refining margins sustained the recovery initiated in the fourth quarter of twenty twenty four, within a general context of margin normalization towards mid cycle levels. Business fundamentals remain supportive as evidenced by the large draw of European product inventories. Looking ahead, the expectations of healthy margins for the rest of 2025 have been overshadowed by the uncertainties on global economic growth and a potential demand distraction due to tariffs.

The margin indicator has averaged $4.2 in April, dollars ’5 point ’3 as of today over the whole year. Yesterday, the margin was $6.8 a barrel and this morning, 7.5 a barrel. So we are seeing a recovery over the last days. In the first quarter, the utilization of our distillation and conversion capacity reached 8391%, respectively. Refinery runs were impacted by planned maintenance in Bilbao, Tarracona and Puertollano, with the objective of completing main plant turnarounds before the start of the driving season.

The margin premium capture of our indicator was zero zero zero point zero per barrel, negatively impacted by intense maintenance activity and the elevated water content in the Maya crude refined. Remember, we talked about that two months ago in February, which require a slight reduction of distillation, but mainly we have to dilute the crude to minimize the impact with an economic impact on the operations. A total of four cargoes of Venezuelan crude were processed equivalent to around 4,500,000 barrels. In the light of present instability in a scenario of potential outage of specific types of crudes, the flexibility of our refining system would allow us to process a wide variety of alternatives that other refineries wouldn’t be able to handle. Finally, in the wholesale and gas trading business, the operator of Caucasieu Pass LNG start commercial operations in April, ahead of the date assumed in our budget, and this advance increases the expected number of gas cargoes to be lifted by Repsol from this facility in 2025 from seven to eleven, contributing an additional EUR 100,000,000 approximately of operating result this year.

In the customer division, first quarter performance benefit from the resilience of the commercial businesses, further strengthened by the expansion of Rexall’s multi energy offering. Adjusted income was EUR 160,000,000, a 3% increase over the first quarter of twenty twenty four, mostly due to a higher contribution from mobility and LPG, partially offset by a lower result in the rest of segments. EBITDA reached EUR $328,000,000, a 24% improvement over the same quarter last year as we work towards the EUR 1,400,000,000.0 objective for this division in 2027. In Mobility, sales of road transportation fuels grew by 11% year over year, mostly as a result of the effective anti fraud regulatory measures and control that they were adopted in Spain towards the end of last year. Repsol has reached more than 1,000 service stations in Spain and Portugal, offering 100% renewable fuels to our clients, on track to reaching 1,500 by the end of the year.

And this is aligned with our strategic ambition to become the leading supplier of renewable fuels in Iberia. The number of digital clients, including users of wireless, grew to 9,600,000 by the end of the quarter, a 16% increase over the same period of 2024. In power and gas retail, Repsol added 127,000 new customers over the first three months of twenty twenty five, reaching a total of 2,600,000 customers as of March, of which more than 1,000,000 have a multi energy plant. Finally, in Low Carbon Generation first quarter adjusted income was EUR 5,000,000, which compares to a loss of EUR 6,000,000 in the same quarter a year ago. Results were driven by higher power prices and higher renewable production, partially offset by a lower contribution from combined cycles.

The average pool price in Spain was €86 per megawatt hour, 92% evolved year over year. The total power generated by Repsol reached 2.1 terawatts hour, including 1.7 terawatts hour Spain and 0.3 terawatts in The USA. In Chile, Repsol started earlier this month is Antofagasta Phase one project, our largest wind farm to date, with a total installed capacity of three sixty four megawatts and another four fifty megawatts are planned in Phase two of the project. Our objective to optimize the capital structure of the business continued through an active asset rotation model adapted to the geography of our portfolio. In Spain, being able to deliver a clear double digit equity IRR with different partners at different times and with different technologies demonstrates the attractiveness of the position we have built.

In March, we complete the rotation of 400 megawatts wind and solar portfolio, value of EUR $580,000,000, and we are in the process of executing another rotation of 700 megawatts expected to be completed before year end. In The U. S, we reached an important milestone in our strategy, completing our first asset rotation in the country, not in the best moment, as you know, and confirming the appeal of our U. S. Portfolio for leading investors.

Under the agreement, we’ll divest a 46% stake in our seven seventy seven megawatt portfolio with a total value of $795,000,000 including $60,000,000 in tax equity proceeds. And the portfolio includes the Frye Solar project and the Hikariya Solar and the storage complex. The partners will maintain joint control of the assets. And in addition, for the remainder of 2025, we expect to execute the rotation of Outpost with a total of six twenty nine megawatts of installed capacity. In the case of Outpost, the fundamentals in terms of PPA are better, are higher, because the moment we took the FID of the project and also because the development of the project time, the CapEx are also better for us.

So we have a clear and a good expectation related to the divestment of rotation process, which I’ve said, of Outpost after the process we executed related to FRAI and Jicarilla Springs. Moving now to the financial results in this slide, you may find a summary of the figures we have discussed today. For further details on our results, I encourage you to refer to the complete set of documents released this morning. And looking now to our updated outlook for 2025 based on today’s visibility, I mean, let me say, I’m going because I know that what I’m going to say now could be confused. I’m going to I’m going to try, but I said to be crystal clear about that.

The guidance for the year remains unchanged under our original macro assumptions, including shareholder remuneration objectives. We don’t anticipate new major project sanctions between now and the end of the year, except for the approval in coming twelve months of the three electrolyzers discussed in our previous conference call. As a reminder, the Spanish government awarded last week €315,000,000 to electrolysis projected at Pibal and Cartagena with cash in expected in 2025. On top of that, we have the innovation fund for Tarragona. And with these three electrolyzers, we are going to fulfill adding, of course, the biomethane that we are going to use in our refineries to produce also green hydrogen.

We are going to fulfill the regulation mandates we have for our sales by 02/1930. Considering a stress scenario, and again, the guidance for the year remains unchanged, but it’s our duty to consider in this volatile scenario worldwide, the possibility of seeing a stress scenario. And we take a stress scenario of $65 Brent from April 1 on to the rest of the year, dollars 3.5 heavy hub and a $4 refining margin indicator from April to December. The cash flow from operations for the year will be projected at 5,500,000,000.0 to €6,000,000,000 In this number, the negative impact of the lower commodity prices will be partially compensated by a higher ambition in the efficiency and competitiveness improvement program that we launched in October for this year. I was not, let me say, fully transparent about that in February because I prefer to talk about delivery than talking about announcement of efficiency and competitiveness programs.

We put this program in operation in October. And this year, we are going to have a contribution from this program and on top of that from the integration of The UK business. Additionally, we for that reason, of course, we are going to project in this stress exit scenario, a cash flow from operations from EUR 5,500,000,000.0 to EUR 6,000,000,000. Additionally, we estimate a CapEx flexibility that we are already acting, seeing the volatile scenario where we are, of around €500,000,000 in our budget, which will situate the 2025 net CapEx figure at around EUR 3,000,000,000 to EUR 3,500,000,000.0 this year, considering EUR 2,000,000,000 from divestments and assets rotation. Let me say that 40% of this divestment and asset rotation have been executed by April 30.

So under this scenario, we will be able to maintain the control of net debt and respect our distribution commitments in any case. So in conclusion, Repsol keeps delivering on its main strategic objectives according to the priorities defined for 2025. In the Upstream portfolio, high grading continued with the agreement to merge our UK business, becoming one of the leading operators in the region. In renewables, our value proposition has been reinforced by a new asset rotation in Spain and our first transaction of this kind in The U. S.

And to finalize, I’d like to underline that even in a stress scenario, again, we maintain the guidance for the year as we did in February, but assuming that we could enter because it’s not in our hands, what will happen in terms of GDP growth in the world, taking into account the current volatility. So let me underline that even in a stress scenario, and the stress was defined by the margins and the commodity prices I said before, the guidance for the year in terms of shareholder distributions and net debt will remain unchanged, supported by the resilience of our integrated businesses, the flexibility of our CapEx budget and the contribution of our efficiency and competitiveness program. So with this, I will turn it over to Pablo as we move on to the Q and A session. Thank you very much.

Pablo Banatine, Head of Investor Relations, Repsol: Thank you very much, Jesu Jon. Now as usual, before moving to the Q and A, I would like the operator to remind us of the process to ask a question. Please go ahead, operator.

Questioner: Thank

Pablo Banatine, Head of Investor Relations, Repsol: Thank you, operator. Let me now move to the Q and A session. Our first question comes from Alessandro Pocci at Mediobanca.

Questioner: Morning, and thank you for taking my questions. I have three, if I may. First of all, you for providing more color on the new stress scenario. And with that regards, I was wondering, you mentioned about €05,000,000,000 of CapEx flexibility. What are the projects where you can potentially rein in CapEx if you see a lower or a weaker macro environment?

The second question is the power cuts that we’ve seen this week in Spain. I believe the impact on the operations is minimal from what we understand. But I was wondering if there is any impact on potentially the sentiment for renewables and bear in mind, we don’t know the cause yet, but I was wondering whether, I don’t know, there could be a change in the sentiment that could lead to maybe a different type of attitude towards the sector. The final question is, you mentioned about Venezuela. What do

Questioner: you think is going to be

Questioner: the availability of heavy grades in 2025? How can potentially help your crack spreads also in light of potential increase from OPEC production? Thank you.

Josu Jon Imaz, Chief Executive Officer, Repsol: Thank you, Mila, Alessandro. So going to your question about the CapEx. I mean, I mentioned EUR 500,000,000 and EUR 200 are going to come mainly from in this, let me say, volatile scenario, it makes sense, delaying some FIDs of renewable projects. So we are not going to take new FIDs in this scenario now. On top of that, we will be talking about EUR 200,000,000 in this business.

We have, as I mentioned before, a natural lagging process in the decision taking process in the industrial area and in the transformation of industrial area. We are talking, probably speaking, about EUR 150,000,000 or something like that over the whole year. We have a delay and stop in this context to a small transactions in organic by I mean, we are talking about EUR 50,000,000 more or less in the commercial businesses that didn’t make sense again in this volatile scenario. And I mean, we are not acting my message to the E and P leader of the business is to accelerate as much as possible Leon Castell to be producing by August to try to accelerate it, not to maintain, let me say, the scheduled time for PICA to be producing in December. And on top of that, it’s true that we have reduced some small CapEx, non relevant and mainly in some cases associated to programs we have in countries like Colombia debt because we invested divested before preparing the budget of the year.

We have some room to reduce this CapEx we were forecasting for this country. Something close to EUR 50,000,000, 80 million in the case of the E and P business, some corporate, small businesses or small investments. So all in all, 500,000,000. Again, main of that coming from the renewable business, plus the lack in the decision taking process of some investment in the industrial area. So in any case, we are putting on track.

Better said, we put on track one month ago this approach in terms of CapEx, seeing that the global numbers in terms of growth and so on, they were deteriorating. And for that reason, I mean, again, I’m quite comfortable saying that we are going to be in a net CapEx this year, in between EUR 3,000,000,000 to EUR 3,500,000,000.0. Going to the impact, you know, everybody knows what happened in the consequences of what happened, better said, in Spain. On Monday, the impact of our industrial assets was, I mean, immediate. We had a shutdown process in five refineries in Spain in the first, let me say, seconds of the process.

I mean, our four refineries, they went to zero. And the first refinery that started, let me say, having power to restart processes was the refinery in Bilbao because the closeness to the French border. That seems to me that happened roughly speaking six hours later at 06:30 p. M. Roughly speaking.

And over the whole evening, I mean, all the refineries have the access to power. Our concern in this kind of processes is always, I mean, the risk we could have of some incidents, cokization processes, solidification of streams in the pipelines and so on that could make very difficult to overcome and to restart operation. Fortunately, nothing in this I mean, let me say, I think that this was a combination of good operation, good teams. But I mean, I’m not going to hide that we were quite lucky regarding the consequences of this shutdown process. So that means that there is no any kind of negative impact.

We are going and we on Monday, we start the process of not only the valuation to try to retake production. Roughly speaking, the distillation scheme and, let me say, schemes they could have three days three days will be needed from the beginning of the restructuring process to start operated. In the case of conversion units, I mean, it depends on the kind of conversion, but I think that probably more correct talking to a process something in between five, seven days. As average, some of them could be before, perhaps the hydro crackers in the higher range, seven days. That is going to be the let me say the consequence.

In supply terms, any concerns we had concerns, of course, on Monday, but we were able to react even mean, we had an open dialogue with the Spanish strategic reserves corporation that yesterday decided to reduce in four days the strategic reserves of the country in terms of products to guarantee the supply. So the market is reacting in the right way. Sales were growing in a normal way on Tuesday, recovering the volumes we had before blackout of Monday. So that is fortunately for our operations, Let me say now we have to work, but that is over and the impact is going to be reduced to those days I mentioned before. I don’t want to enter to speculate about what could be the root cause of what happened on Monday.

Of course, you know that there are public investigation processes, and we prefer to wait and to expect the conclusions of these investigations on track. Let me say that in any case and in any regulatory framework, the current one or a future one, I think that renewable generation is going to go on being a relevant part of the Spanish production system. But again, I think that the investigations are are on track, and I don’t want to enter, let me say, to to to add more noise to what we have in the country in terms of speculation about what happened with the blackout of of Friday. Going to to Venezuela, I mean, first of all, let me say that as probably every everybody of of you, you know, we received at the March a communication from NOFAQ. I mean, giving us the same treatment of any all the American companies.

I mean, explaining that specific license will be revoked on 05/27/2025. I mean, the American companies operating in Venezuela, they’ve received something very similar or exactly the same. I have to remind you that our main activity and production is not under this license. It’s not oil production. We are mainly gas producers in Venezuela.

And 85%, probably speaking, of our production in Venezuela is gas production. And let me say that we have a direct and open dialogue with U. S. Authorities, and we work jointly with U. S.

Authorities with the objective of holding our assets and our activity in Venezuela in the future. So we are speaking, we have an open dialogue. And in this sense, I prefer, I mean, to go on working on that in this frank and direct relationship we have with the American government. The impact from OPEC production, I mean, fortunately, you know that in the Atlantic Basin, I think that we have a lot of sources of heavy oil. We have Colombia, we have at the moment, we have Venezuela.

We have Canada. We have Brazil. We have Western African production. On top of that, you know that we have from Italy, from Albania, from South Iraq and so on. And it seems to me that more OPEC production could mean more heavy oil in the market because this production could add in some way some kind of heavy oil supply to the market.

But again, we are always, let me say, occupied doing that, but we don’t have any special concern related to the supply of heavy oil to our refineries. Thank you, Alexander.

Acknowledgement: Thank you.

Pablo Banatine, Head of Investor Relations, Repsol: Thank you very much, Alessandro. Our next question comes from Alister Syme at Citigroup. Go ahead. Thank you.

Alister Syme, Analyst, Citigroup: Thanks, Pablo. One very quick question. First is just the currency assumption that you’re using in your stress scenario. Is it the same as you were previously using? And secondly, in a slightly bigger perspective, but as refining margins come down, we’re getting some sense of the underlying performance of the refining business again.

I was just looking if you sort of look at that run rate EBITDA in refining, you’re about 25% below where you were in 2015 through 2019, which just seems like a reasonable period to compare to. Is that difference just energy costs? Or is there something else we should be thinking about as we sort of model the profitability of refining in this environment? Thank you.

Josu Jon Imaz, Chief Executive Officer, Repsol: Okay. Thank you, Alistair. First, in this stress scenario, the assumption, Eurodollar, we are taking is 1.1. I mean, if you have if you consider the EUR 1 point 1 0 from, again, April 1 to the December. If we take, for instance, EUR 1.12, you have to reduce the cash flow from operations in EUR 30,000,000 per every cent you increase the weakness of dollar.

So that means that EUR 1 point 1 2 will have a EUR 60,000,000 less in terms of cash flow from operation, roughly speaking. But again, our CapEx commitment in euros, because we are mainly working as Rexall in euros, without weaker dollar taking into account that our main CapEx effort, either in the E and P business or in the renewable business now is focused on The United States, we also have less net CapEx due to this weaker dollar. So I mean, that are the figures. Full transparency, we have the budget for this year at 1.1 because let me say, that was the indication of our chief economist for 2025. I know that this was it was not evident in December, not even for me.

I have to to realize that he had he was right again. So going to the refining EBITDA margin, let me say I mean, the EBITDA breakeven today, I’m going to check this figure today, could be in general terms, in recurrent terms, is lower than the EBITDA breakeven we had in our refining system in 2019. This first quarter, we have some additional effects. And these additional effects are, first, the turnaround due to the maintenance in Porto Llano and Petronor that reducing distillation is also impacting the EBITDA. On top of that, the EBITDA breakeven is also depending on the premium.

And as I mentioned before, we have had two negative impacts on the premium. And the most important of that has been the Maya crude oil problem with water. That I mentioned, remember, February that the impact on January was $17,000,000 in January. So we have something similar in February and a figure slightly below, but not very different in March. So behind this 45, roughly speaking, of $50,000,000 is the $50.5 barrel of reduction of premium.

Thank you, Alistair.

Pablo Banatine, Head of Investor Relations, Repsol: Thank you very much for your question. Our next question comes from Michele Della Vigna at Goldman Sachs.

Michele Della Vigna, Analyst, Goldman Sachs: Thank you very much. Two questions, if I may. The first one is on the potential impact of The U. S. Tariffs and if that in any way could impact some of your developments in The U.

S. At the moment? And then secondly, I was wondering if you could perhaps lay out some of the accounting impact of The UK joint venture if we started to see some of that already in Q1? And what’s going to be the impact on the rest of the year? Thank you.

Josu Jon Imaz, Chief Executive Officer, Repsol: You’re at Timile, Michele. So first, I mean, we have seen what is happening in The US from many angles and points of view. I mean, it’s true that the current message of the of the US government emphasizing the importance of secure, affordable, and responsible energy is fully aligned with the principles that we have defined in Repsol and in our own strategies. But it’s also true that we are experiencing now a volatile scenario with this, let me say, messages around tariffs and so on that are creating some source of a lack of certainty globally speaking. And, I mean, taking into account what you are saying, let me say that in projects with FID, because the yes.

The the degree of development and commitment of this project, this potential because again, we are talking about the potential scenario about tariffs is not relevant for Repsol. If we go to new projects, it could be relevant, we don’t know. And for that reason, I mean, we prefer to to wait and not taking, let me say, new investment or FID commitments before knowing what is going to happen exactly. I’m not saying that that is going to be bad at all. What I’m saying is that, of course, we prefer to have all the cards in our hands behind playing the game.

So we are going to to wait. We are going to see how these negotiations worldwide and specifically between Europe and and and US develop over the coming weeks, months. And we hope and we expect that that could be fine. But in any case, we prefer to have, of course, all the figures on the table before taking any kind of investment. Because, of course, we have to take imagine a project and you have to close not only FIDs and commitments in terms of CapEx, you also have to take the commercial side from the other side.

And you have to try to link both parts in terms of return. So it makes sense to wait a bit before having this kind of commitments. Going to your question about The UK, the closing is going to happen at the end of the third quarter of the year, 2025. At closing, we don’t see no any relevant impact on financial statements. And in, let me say, in accounting terms, we have to see what is the impact in terms of the play, let me use the term, between the current commitments that today are the commissioning commitments that are, of course, in our balance and which part of that is going to convert in financial debt.

But I mean, in terms of the balance, it’s going to stay in the same terms, but we are going to have probably an accounting change in the third quarter after closing. But again, with no relevant impact on financial statements. Thank you, Michele.

Pablo Banatine, Head of Investor Relations, Repsol: Thank you very much, Michele. Our next question comes from Alejandro Vigrill at Santander. Go ahead, Alejandro.

Alejandro Vigrill, Analyst, Santander: Hello. Good morning. Thank you for taking my questions, Joseo and Pablo. One question is about the guidance on the stress scenario. I remember in the fourth quarter results, you also announced a minimum share buyback of EUR 700,000,000.

You maintain also this guidance even in a stress scenario? That’s the first question. And the second question is also in connection with Michele’s question about The U. S. And investments there.

If you can give us any color about The U. S. Natural gas business, if you’re planning to reactivate some rigs or additional activity there in this scenario of resilient U. S. Natural gas prices?

Thank you.

Josu Jon Imaz, Chief Executive Officer, Repsol: Gracias, Alejandro. So crystal clear. Under I mentioned, we have our guidance. That is the same guidance we had in February. Under the hypothesis that is our duty to do that of this stress scenario, as I defined before, we will maintain our distribution program.

That means that we are going to maintain. I mentioned that we expect something in between EUR 5,500,000,000.0 to EUR 6,000,000,000 of cash flow from operations in this stress scenario. So we will maintain EUR 30,000,035 cash distribution amount for related to this cash flow for operations and being very specific. I mean, this scenario, I defined before, we are going to maintain this minimum of EUR 700,000,000 equivalent for our share buyback program this year. Crystal clear.

Thank you. Alejandro, sorry. The U. S. Natural gas business, we have a positive approach.

We have already one rig working in the Marcellus. So increasing, let me say, our bet in the area. And in this sense, of course, we are in a prudent way. As I said in February, remember that I mentioned that, I mean, we want to have a prudent approach about prices because our main target in the unconventional has to be to guarantee and to increase free cash flow in this kind of assets. Because the unconventional in the past, you know, that companies we were very focused on net present value and these kind of concepts that are, of course, are true, are okay.

But free cash flow is very important. So progress in terms of CapEx is important. In this sense, the free cash flow this first quarter of Marcellus was EUR 150,000,000 positive, even though this CapEx effort we are developing, and I mentioned before. Congratulations, Alejandro.

Alejandro Vigrill, Analyst, Santander: Thank you.

Pablo Banatine, Head of Investor Relations, Repsol: Thank you very much, Alejandro. Our next question comes from Biraj Borkhataria at RBC. Go ahead with your question, please, Biraj.

Acknowledgement: Hi. Thank you both. Just wanted to go back to the stress scenario you put forward because I think a number of investors may consider that a base case scenario. So I was just wondering how to think about how much CapEx flex you have if you were in a more stressed scenario, let’s say, because we don’t know what’s going happen with OPEC and how tariffs play out. So that $500,000,000 flex you talked about this year, is that the maximum?

And how should we think about how much flexibility you have for 2026? And then a couple of quick modeling questions. There’s been a big delta between cash tax and P and L, not only for Q1 but last year or so. So how should we think about this year? And anything you can say on working capital expectations for the year?

Thank you.

Josu Jon Imaz, Chief Executive Officer, Repsol: Thank you, Ria. So let me say that you always have flexibility related to CapEx From my point of view, the question is the kind of pain you are going to provoke with this CapEx reduction. For instance, I could say today, I mean, we want to delay the CapEx, let me say, in Alaska, but we don’t want to do that because we are seeing a first order in December. We could take the decision of, okay, we are not going to take the FID of an electrolyzer, but the kind of pain we will provoke will be that in 02/1930, have to fulfill our regulation as European operators in terms of adding a minimum of 1% of renewable fuels with non biological origin to our products. And the only way we know to do that in theoretical terms is through adding hydrogen.

And we have the opportunity to reduce in a, let me say, dramatic way, the net CapEx of these projects, thanks to a strong public support for this FID. So I think that today, reducing €500,000,000 in the CapEx we mentioned before is the kind of reduction we could do, not provoking any kind of additional pain in the organization. So that means that we are going to be something in between EUR 3,000,000,000 to EUR 3,500,000,000.0 of net CapEx this year, and we are going to use the common sense to take our decisions related to CapEx. In case of sin, let me say that the world is entering, not in a stress scenario that I defined before that I think that is quite stressed taking into account the valuables and the commodities we have today, we could act and we could do additional things and we could stop projects as we did in 2015, ’20 ’16. We know how to do that.

And in some way, let me say that Repsol, because the kind of assets we have and so on, because the integration level, we are a company that usually performs better than others in a stress time. I’m not going to say that we perform better than others in good times, but perhaps in a stress times as you could take from the history of company. So in this sense, let me say that what we have seen also is a 2026 that is going to come healthier in terms of CapEx. Again, not touching this pain I mentioned before. Why?

Because, as I mentioned, two of the three projects in terms of investing in the E and P are going to have an end this year. Leon Castile and the main part of Pika. Pika is going to have some tails in 2026, and that is going to reduce the CapEx effort in the Upstream. So we are going to have, for that reason, an additional flexibility in 2026. And again, I think that we are comfortable maintaining the guidance we have in terms of EUR 5,500,000,000.0 to EUR 6,000,000,000 in terms of cash flow from operations this year in case of under stress scenario, maintaining the debt level, roughly speaking, we had at the beginning of 2025 and at the same time, fulfilling our old commitment in terms of distribution, I think that is quite fair.

Going to your question about tax versus P and L difference, I mean, what we are seeing is an effective tax rate at around 39%, forty % this year, for the whole year 2025. And we expect a cash out over the whole year that could be at around EUR 1,000,000,000 the whole year. And I think that what we have seen and mainly this quarter is overpayments in previous year. So that means that we are in some way cashing in what we anticipated by different ways last year. And going to the working capital, we have seasonal reasons.

Remember the conversation we had one year ago in April. I said that we will have, let me say, a flat for the same prices, flat working capital for the whole year. And we were there at the end of twenty twenty five. So that means that this year, at the same price, we are going to have a working capital that is going to be the same or similar to the working capital we had at the beginning of twenty twenty five or the end of twenty twenty four better set. And we have mainly linked to the refining maintenance, I mentioned before, in Petronor and in Puertollano behind this working capital increase.

Thank you, Viras.

Pablo Banatine, Head of Investor Relations, Repsol: Thank you very much, Viras. Our next question comes from Pablo Cuadrado at Kepler Cheuvreux. Go ahead with your questions, please. Thank you.

Pablo Cuadrado, Analyst, Kepler Cheuvreux: Hi. Good morning, everyone. Three quick questions, please, from my side. The first one is on the D and A on upstream. I noticed that it was significantly down in Q1 versus Q4.

I think last year, trend was also similar. It was quite low in Q1 and later on was going up. So can you help us to understand a little bit the difference and maybe help to understand our guidance for full year in terms of the D and A? Second

Acknowledgement: question is

Pablo Cuadrado, Analyst, Kepler Cheuvreux: on the there is a significant decline on the non current provisions during Q1 of the balance sheet, around $2,000,000,000 reduction. So if you can provide also more detail on this. And third is related to the completion of the acquisition of Bontribiria during Q1. So we expect that now that this deal has closed that you should probably get a benefit in terms of cheaper cost on the feedstock to produce renewable fuels and therefore to see a little bit of an improvement on the operation of those activities. But I think right now in the overall market, the situation is quite difficult.

Thank you.

Josu Jon Imaz, Chief Executive Officer, Repsol: Gracias, Pablo. Going to your first question, it seems to me that there are too many reasons. Probably the most important is less production in the first quarter. As I mentioned before, we took the decision of shooting down all our facilities in the North Sea in order to proceed to a deep and strong maintenance campaign in the area. We lost production in the quarter.

We have recovered this production. Today, are producing about 560,000 barrels a day. Thanks to this increase of production. We have to take into account that in The UK, after the closing of the third quarter, we are going to increase this figure, something in between 20,000, 20 five thousand barrels a day because the new Neonxt company we launched some weeks ago, and that is the main factor explaining this depreciation reduction in the first quarter. We have also to add two things.

One of them, for the first question related to the depreciation is also the impairment in some because prices, commodity prices and so on. We did in the fourth quarter, as you know, and we announced in February. So that means that less capital employed in our balance related to this impairment means a less depreciation. Going to your second question, I mean, encourage you to check what I’m going to say now with IR, but my perception is that the main factor probably is the reclassification of The UK to as assets for sale. And there you have The UK liabilities, and that is related to this, let me say, reclassification because we are merging, and we are going to have control in the case of The UK, and we are going to have a close in the third quarter.

So what we are going to have is the consideration of UK as an asset for sale. So it’s mainly The UK liabilities. But, again, you could check the exact amount of this figure with the IR team. Bungee Iberia. What we expect from this transaction?

So what we expect from this transaction is, first of all, I mean, we have a 40% of our business. We’re a business with a positive EBITDA, and we are going to have, let me say, the benefits of being part of this business. On top of that, we are going to have also an expectation of a better feedstock and a cheaper feedstock. We are considering a reduction in terms of feedstock from this improvement that is going to be at around $50 a ton as a reduction. So what is more important, are going to have also the access to new crops, new feedstocks.

We are going to innovate with them, I mean, Camelin and some other sources of feedstock that are going to add more competitiveness to our renewable fuel production. Gracias, Pablo.

Acknowledgement: Thank you, Mr. Jim.

Pablo Banatine, Head of Investor Relations, Repsol: Thank you very much, Pablo. Let’s go with our next question comes from Irene Jimona at Bernstein.

Questioner: Thank you very much. Good morning, Josu John. The stress test is very useful. Thank you. I wanted to ask what cost savings, so what OpEx reductions will your October efficiency program contribute to the cash flow in that stress scenario, please?

And then secondly, on The US renewables rotation, you had indicated back in the fourth quarter conference call a second US rotation later this year. Can you say if you are experiencing a, let’s say, deterioration in The US environment for this type of deal given The US President’s obvious dislike of the renewables industry? Thank you.

Josu Jon Imaz, Chief Executive Officer, Repsol: Thank you, Irene. When we are talking about the efficiency and competitiveness program, The figure, roughly speaking, is at around €450,000,000 of OpEx reduction this year. The main part of this figure going to the E and P, $4.50 sorry, the main part comes from OpEx. There is an apart, I mean, 25%, roughly speaking, that will come from the working capital optimization in structural terms. I mean, because we changed the operational model and the way to operate our industrial assets.

So this €450,000,000, if we go to the E and P, the main sources are the saving costs and efficiency in The UK operation. That is very important part. We have the G and A because we are changing the operation model in The US, in the unconventional, with a strong impact in terms of G and A, is also a project that is part of this change. Let me say that on top of that are the quick wins and the more important figures, all that is in some way embedding the whole E and P business. If we go to the industrial business, I mean, I could deploy measures that could go to the acceleration of some reduction of CO2 program.

So that means less energy. In the case of refining, we are we have the change of the maintenance model, improving and optimizing what we call the one store, one lab program. That means that our five refineries are integrating all the storage they need for maintaining, optimizing the working capital and optimizing also the operational cost. We are reapplying changing the maintenance model of tanks, entering the robotics to change that. I mean, we have, let me say, programs in the chemical business, for instance.

As I mentioned before, we are going to reduce in €25.30 a ton, the breakeven of the chemical business this year. And that is also part of this program. In the case of the commercial side, we have an increased multi energy approach with an improvement of the fundamentals of the business that is going to have as a consequence that we are going to have an EBITDA in this business higher than what we expect in our budget that is going to be at around EUR 1,250,000,000.00 this year, roughly speaking. Also, we are, I mean, optimizing the renewable business, the corporate side. So we have, let me say, last summer, September, October, seeing what was happening, let me say in the world before this quarter, we launched this deep program that is embedded in some way, the whole company.

If let let me say, going to The US renewable, first, I mean, I don’t know what could mean. I share your point, but I don’t know what could be a deterioration of the environment in The US that could happen. But saying that we have closed the Stone Peak transaction, let me say, not exactly in a good moment in volatility terms in April 2025, let me say, in the midst of the storm in some way, and we have been able to do that. And my not only my hope, my expectation is and probably I don’t set that in a public way as I’m telling you today, but probably in the one to one meetings with all investors, I have shown that because the conditions were we took the FID of this FRAI and Jicarillas project, that was the FID after the pandemic, that means with lower PPAs, that’s what we saw later. We took the Ukrainian crisis and the solar panel supply chain concern when we invested in this project.

So what we have behind Outpost, Pennington, Pecan Prairie are significantly better in terms of PPA in the long terms. That means that we have better projects for the future. On top of that, the CapEx has been optimized in many of these projects because, I mean, they didn’t suffer what we saw two, three years ago. And for that reason, I mean, can’t say, Irene, that things couldn’t be worse in the world because it’s not in my hands, but I have a better expectation for the fourth S.

Rotation because we did this one that was, for these conditions, I expect before, more difficult. Thank you, Irene.

Questioner: Thank you very much.

Pablo Banatine, Head of Investor Relations, Repsol: Thank you very much, Irene. The next question comes from Henri Patricot at UBS.

Pablo Banatine, Head of Investor Relations, Repsol0: Yes. Good morning, everyone. Thank you for the update. Two questions, please, from my side. The first one on production for the year.

You haven’t changed the guidance. But if I heard you correctly, Zhujong, you mentioned production currently at 560,000 barrels per day, and you have quite a few start ups over the rest of this year. So just wondering if we should expect the production to be very much towards the upper end of that range for the whole of the year? And then secondly, staying on the upstream side and following up on the comments on hedging. Can you just remind us where you stand for 2025, ’20 ’20 ’6 as well on U.

S. Gas price hedging, the percentage and the levels, if that has changed? Thank you.

Josu Jon Imaz, Chief Executive Officer, Repsol: Next year, Andre, if we go to the production, I mean, we maintain the guidance of five and thirty thousand, five hundred and 50 thousand barrels a day for the whole year, but clearly in the high part of the range it could exceed? Yes. But I prefer to be present in this guidance. I maintain the guidance and I say we will be in the higher part of the range. And we will try, let me say, to to be more granular in the conference of July because it’s true that there are four start ups.

But I mean, the July, first of August is going to start. Leon Castillo is going to add in year terms 20,000 barrels a day, but it’s going to start with the ramp up process in July. Probably Leomka still could add 7,000, eight thousand barrels a day the year in terms of the whole year, I mean, because it’s going to start in the second half of the year. So Pika is going to have the first oil at the end of the year, but it’s not going to add real barrels this year. Lapa is going to happen in November, but we could be talking net Repsol one point five thousand barrels a day, roughly speaking.

So, I mean, that is going to happen, high part of the range. Probably the most important game changer is going to be the 20,000, 20 five thousand new barrels that are going to add from September. But I’m more comfortable saying that we will be in the higher part of the range. Hedging, I mean, have the note in front of me, so I’m going to try to be very clear. 2025, we have 55,000 of the volumes hedged, output collar with no cost, three, six point one.

By 2026, we have almost 60% of the total production hedged with output collar structure that could be in 75% of the hedges, 3.2, five point one, this collar, and 25% of this hedging next year with three point five 12 dollars million BTU, I mean, in the color. That means that we take from 3.5 and we have all the upside till this figure that is exactly 11.7 to be clear. And by 2027, we have 15% of the production hedged with a collar, with output three and a coal of $5.75 million Btu. So is there any change? Is there, let me say, any small addition of volumes in this range?

Thank you. Merci, Andre.

Pablo Banatine, Head of Investor Relations, Repsol0: Great. Thank you.

Pablo Banatine, Head of Investor Relations, Repsol: Thank you very much, Henri. Our next question comes from Sasikan Chilikuro at Morgan Stanley.

Pablo Banatine, Head of Investor Relations, Repsol1: Hi. Thanks for taking my questions. I had two, please. The first one was relating the disposal proceeds. You’ve maintained the EUR 2,000,000,000 disposal and rotation proceeds.

I was just wondering if you can provide a breakup of that guidance. You highlighted 40% already been is already achieved through the deals that have been announced so far. Do those relate to these rotations, the two rotations that you have highlighted? Or is there anything there anything more there? And also, I remember you had like 40% of the 2,000,000,000 related to upstream sales.

I was just wondering how confident you were in achieving those as well. Thanks. The second one was back to the refining result this quarter. It’s just a confirmation you highlighted two reasons, the crude quality effect and the turnaround effect. Is that possible to quantify what was the impact because of those two?

And just wondering if you were to look forward, these two have been addressed and there’s not much data on activity in the coming quarters. Just want to check if these have this could potentially be reversed as well in 2025.

Acknowledgement: Thank

Josu Jon Imaz, Chief Executive Officer, Repsol: you, Sasi. I mean EUR 2,000,000,000, as you mentioned, 40%, including the tax equity part, close, 60% pending. We are in April. It’s related to the two rotations I announced. That means the Spanish seven hundred megawatts assets plus the outpost project in The U.

S. And on top of that, I’m not going to hide that we are also, of course, analyzing the market, the potentiality of assets where we don’t see today a potential value creation and the strategy of asset rotation and portfolio management, we could explore. And when I say that, I could mention either the low carbon business or some others. That’s again, we are always touching the market and we have the target of disposing EUR 2,000,000,000 this year. I mean, having achieved 40% of figures in April, I mean, it’s not guaranteed that that is going to happen, but it’s giving us a clue that we are taking this subject in a very serious way.

Refining margin, roughly speaking, I mean, Maya, zero point five dollars a barrel. If we take the the the imbalance of of of the turnarounds program over the whole year and the concentration in the first quarter, zero point ’3 ’5, so close to 0.4 barrels today, turnaround program plan. And we had some operating issues in Tarragon that, probably speaking, could be $0.2 a barrel. All in all, $1.1 a barrel that we are in some way missing this quarter because I said before. Thank you, Sachin.

Pablo Banatine, Head of Investor Relations, Repsol: Thank you very much, Sachin. Our next question comes from Paul Redman at BNP Paribas.

Pablo Banatine, Head of Investor Relations, Repsol2: Hi, guys. And thank you very much for your time. The first one is just on the CapEx and timing of divestment cash flow. Just to be clear, is your expectation you would have the cash in from the divestments before the end of the year, so the total GBP 2,000,000,000? Or is it based on announcements?

And if there was a delay to divestments, I know announcement before the end of the year on the rotations, how should we think about CapEx? Is that we’ve spoken about flexibility, but is GBP 3,000,000,000 to 3,500,000,000.0 a ceiling? And then secondly, just to be really clear on the minimum EUR 700,000,000 buyback, is that at prices below the scenario? Or should we remain thinking about 30% to 35% being the base case?

Josu Jon Imaz, Chief Executive Officer, Repsol: Thank you, Paul. So we have the commitment to cash in EUR 2,000,000,000 this year. Of course, we have different cards on the table. That means that we will have, in some ways, delays and in some others anticipation. So we are going to play with more cars than the cars we need to have these EUR 2,000,000,000 of disposals and rotations with a clear target of cashing €2,000,000,000 this year.

Going to what you said, this I define an exit scenario. And in this scenario, what I’m saying is that we remain thinking about the 3035 of the cash flow from operations we have in the base case. And I was crystal clear saying that, I mean, if this 30 is 1,645,000,000.000, are you going to to develop the whole €700,000,000 you committed? And my answer is yes. We are going to guarantee this minimum of €700,000,000 under the ACID scenario I defined before.

I’m not going to go to the maths to reduce this €700,000,000. Crystal clear. Saying that, I mean, if if the war drops and we are in a different scenario that is not the ACID, I mean, Paul, we will meet in July in the conference for the second quarter, and we will define our strategy in a world that is dropping. Thank you.

Pablo Banatine, Head of Investor Relations, Repsol: Thank you very much, Paul. That was our last question today. With this, we will bring our first quarter conference call to an end. Thank you very much for your attendance.

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