Repsol YPF

Exploration & Production 2007

Income from Exploration and Production operations in 2007 was ?2,968 million, compared with ?3,286 million obtained in the previous year, which is a decrease of 9.7%. EBITDA totalled ?5,227 million versus ?5,609 million in 2006.

This reduction was mainly due to the effect of the 8.4% depreciation of the US dollar against the euro, which resulted in ?285 million less income, to the increase in production costs (€277 million), to the increase in technical amortisations (€155 million) as a consequence of an increase in investment, and to the increase in exploration activity bringing about greater expenditure in exploration (€174 million).

The activity, mostly as a result of the improvement in crude oil prices, which was partially compensated by the decline in certain fields in Argentina, increased income by €477 million. Additionally, the cancellation of the operating contract in Dubai and the rest of the contractual changes reduced income by €119 million, which had practically no effect on net income.

The average sale price of Repsol YPF’s basket of liquids was US$49.84 per barrel (?36.38 per barrel) compared to US$46.29 per barrel (?36.88 per barrel) in 2006. The average
price of gas was $2.15 per thousand cubic feet, similar to that of the previous year.

Lifting costs increased in 2007 by €277 million, reaching US$3.82 per barrel, 32.2% higher than in 2006. This increase was mainly in Argentina due to accumulated inflation, contract renegotiations and the maturity of the fields, which have a direct impact on the increase in costs, and in Trinidad and Tobago, due to increased expenditure on safety and environment. Finding costs were US$32.41 per barrel, with an average of US$6.78 per barrel for the 2003-2007 period.

Ensuring growth

The activities developed by Repsol YPF in 2007 continued to strengthen its position in key areas for the company, such as the Gulf of Mexico (United States), North Africa, Trinidad and Tobago, Peru and Brazil, and ensured organic growth by maximizing the profitability of assets and the increase in production and reserves for the 2008-2012 period.

Repsol YPF has significantly increased its presence in the deep waters of the Gulf of Mexico (United States) in the last two years with the entry into the major Shenzi-Genghis Khan petroleum development project and having obtained a large number of new exploratory blocks, this area is considered one of the most profitable areas in the world and to the have the greatest deep-water exploration potential.

In June 2007, the official U.S. Mineral Management Service (MMS) approved the unification of Shenzi and Genghis Khan (Shenzi Unit). During this same year the purchase of 28% of the Genghis Khan oil field, discovered in 2005, was finalised. This purchase, in conjunction with the purchase of 28% of the Shenzi field in 2006, forms part of the company’s strategy to diversify and grow in OECD countries. The Shenzi/Genghis Khan fields, so far, comprise one of the largest discoveries in the deep waters of the Mexican Gulf.

Genghis Khan entered into production in October 2007 and its complete development together with Shenzi, begins in 2009, and will significantly increase company production and reserves in the coming years. Development work continued on the release to production of the Neptune field, which is forecast for the first half of 2008. The Neptune consortium is made up of Repsol YPF (15%), BHP Billiton (35%, operator), Marathon Oil Corp (30%) and Woodside Energy Inc. (20%) 

In October 2007, Repsol YPF obtained 18 new exploratory blocks, including GC-423, in association with the Marathon Company, and GC-348, in conjunction with Chevron, both with great potential.

In North Africa, Repsol YPF has a major presence, centred in Libya and Algeria. In these countries, there are significant projects under way that will enable sustained and profitable growth for the next few years.

More information