Galp releases today the results of the first quarter of 2020 together with an overview of the recent developments, with the following highlights:
First quarter of 2020 highlights
CFFO was down YoY to €244 m, impacted by the weaker operational performance and despite a working capital release in the period, mostly reflecting the lower commodity prices. FCF was €63 m.
Consolidated RCA Ebitda of €469 m:
- Upstream: RCA Ebitda was €286 m, down 24% YoY, impacted by the steep decline in oil prices.
Working interest (WI) production was up 17% YoY to 131.4 kboepd, supported by the increased contribution of Lula and the ramp-up of the FPSO allocated to the Berbigão/Sururu area, as well as by the higher production from the Kaombo project in block 32, in Angola;
- Refining & Midstream: RCA Ebitda was €90 m, a €64 m increase YoY, with a swing in pricing lag effects on the supply activity offsetting the weaker refining performance, from the harsh macro environment and planned maintenance activities performed in Sines’ HCC unit, and lower trading contribution;
- Commercial: RCA Ebitda of €90 m, stable YoY, driven by a stronger contribution from Spanish activities;
RCA Ebit was down YoY to €217 m, following the weaker operational performance.
RCA net income was €29 m. IFRS net income was negative at -€257 m, mostly reflecting a significant accounting inventory effect of -€278 m, as a result of the sharp commodity price drop during the period.
Capex totalled €144 m, of which 72% allocated to the Upstream business, mostly focused on BM-S-11/11A and Mozambique’s execution. Investments in downstream activities were directed to the refining system, as well as to logistic assets in Mozambique.
Recent developments
In light of the ongoing sharp drop in global oil products demand and prices, Galp is targeting significant reductions in cash spending over the next few quarters.
Some of the initiatives are already in place, whilst others will be implemented as per the evolution of market conditions. Compared to previously announced guidance, Galp’s Capex + Opex is now expected to be reduced by over €500 m per annum during each of 2020 and 2021.
Therefore, Galp’s revised net capex guidance following this cost adjustment is €0.5 – 0.7 bn during such period, which could be adjusted according to market conditions. Free cash flow neutrality should be reached at Brent prices of c.$20/bbl.
Considering the current situation and macro volatility, all other operational and financial guidance provided at the Company’s Capital Markets Day presentation in February should no longer be applicable. Updated projections will be released to the market in due course.
All documents, including the 1Q20 Results report and presentation, together with the Excel tables, are available on our website through this link.
Conference call:
The conference call for the results’ presentation will be held today at 11:30 am U.K. time. The conference call details are as follows:
UK:+44 (0) 207 192 8000 or +44 (0) 800 376 7922 (UK toll free)
A replay of the conference call will be available for one week. The numbers to access the replay of the conference call are +44 (0) 844 571 8951 (UK) or 44 (0) 808 238 0667 (UK toll free) and the Conference ID is 6819009.
Webcast:
To access to the webcast (audio stream), please click here.
The IR Team is fully available to address any questions you might have. Nevertheless, in light of current circumstances, the Team is using a remote work system and therefore we kindly ask you to reach us at the below contacts, or through an email (investor.relations@galp.com).
• +351 917 437 077
• +351 911 172 673