Portugal's Galp Energia said adjusted first-quarter net profit more than doubled from a year earlier, in line with expectations, thanks to a sharp increase in refining margins and rising oil output. In his first news briefing as chief executive, Carlos Gomes da Silva also said Shell's acquisition of BG Group, which is Galp's partner in some Brazilian projects, was "very positive and giving more real value to the assets".
Galp is also a partner on some projects with Brazilian state oil giant Petrobras. "Shell is an international colossus and being partners with Shell/BG and Petrobras only adds magnitude and leverage to Galp's position," Gomes da Silva said on Monday, adding Galp had no plans to dispose of assets in Brazil.
Following a corruption scandal at Petrobras, which took a $17 billion write-down in its long-delayed 2014 results last week, Galp does not expect further big changes to projects, he said.
Last month Galp, which is involved in nearly 30 on-shore and off-shore oil and gas projects in Brazil, flagged a one-year delay in the building of production ships which it is developing with Petrobras. "We do not expect any change from the plan presented in March," Gomes da Silva said. Galp made a first-quarter net profit of 121 million euros ($132 million), up from 47 million euros a year earlier. Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 50 percent to 398 million euros. The results are adjusted to reflect changes in the company's stocks of crude.
Analysts had forecast, on average, an adjusted net profit of 122 million euros and EBITDA of 376 million. The benchmark Brent crude price fell in January to its lowest since 2009, helping lift refining margins in Europe. Galp's refining margin soared to $5.9 per barrel in the period, from just $0.9 a year earlier. Galp, which owns both of Portugal's refineries, remains heavily reliant on that side of its business despite having expanded in crude production with projects in Brazil and Africa.
Galp said its oil output soared almost 43 percent to 38,400 barrels per day in the quarter thanks to the ramping up of Brazilian projects. It also refined 34 percent more oil and gas. Still, higher output only offset part of the impact of low oil prices as EBITDA at its exploration and production division fell almost 10 percent to 94 million euros. The CEO said its oil and gas output should about double by 2017, in line with its plan envisaging increases at an average annual compound rate of 25-30 percent until 2020.