UPDATE 2-Repsol sees lower oil price bringing asset buy in next few months
* No sale foreseen to fund buy, any approach to be friendly
* Q3 profit surges on margins, Libyan oil, lower financial costs (Adds new details on potential acquisition)
By Julien Toyer and Jose Elías Rodrígueztrue
MADRID, Nov 6 (Reuters) - Acquisitive Spanish oil firm Repsol expects the fall in oil prices to flush out a deal within the next two to three months as potential sellers lower their price, the company said on Thursday.
The cash-rich group has $10 billion to spend to fill the gap left by the nationalisation of its Argentine business two years ago, cut its heavy exposure to conflict-ridden regions such as Libya and Venezuela and to protect it from any takeover bid from bigger rivals.
After failed attempts at deals with Talisman and Pacific Rubiales of Canada, and the Norwegian arm of Marathon Oil, Repsol continues to pursue oil producing targets, both assets and companies, located in stable countries and that could add immediate value to its portfolio.
Sources close to the matter said earlier this week that the firm, which is looking for a 7 or 8 percent investment return, was currently trying to narrow down a long prospective shopping list running to dozens of small companies and other assets to just a handful of targets.
The finalists are likely to be those that offer oil fields already in production as well as an entry into the U.S. shale industry, the sources added.
"In the short term seller and buyers' expectations are somehow far apart. I think that at least two or three months with these levels of prices would probably close this gap into a more feasible way to close a transaction," said Chief Financial Officer Miguel Martinez in a conference call with analysts.
Martinez also said that a stronger euro against the dollar was also supporting the company's capacity to make an acquisition in the short term.
Repsol had net cash of more than 10 billion euros ($12.5 billion) at the end of September while it reduced its debt by close to 400 million euros in the third quarter, to 2 billion euros, lowering its financial costs and boosting profits.
Average recurring net profits, adjusted for one-time gains and inventory effects, surged 41 percent to 415 million euros in the three months to end-September, up from 295 million in the same period last year and just above the average forecast of 405 million euros given in a Reuters poll of 10 analysts.
Total production rose 8.2 percent to 366,000 barrels of oil equivalent a day (boed) from the previous three months, supported by a recovery in Libya, where production resumed in July following disruptions caused by the local conflict.
Refining margins, the other main driver for the strong set of earnings, surged 25.8 percent from the previous quarter as prices fell for heavier-grade crude oils.
Repsol had said it could spend between $8 billion and $10 billion on a purchase, or even more if it decides to sell its 30 percent stake in Spanish gas and electricity firm Gas Natural GAS.MC, worth another $8 billion at current market prices.
Martinez said, however, that the company was not planning any asset sale to fund an acquisition at the moment.
He also said Repsol's management was under no rush to pay another special dividend to shareholders as he reiterated it would only do so if no acquisition was made within the next 18 to 24 months. (1 US dollar = 0.7985 euros) (Editing by Greg Mahlich)
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- November 6, 2014
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