Could this renewed optimism be the end of a dreadful cycle for Repsol? Since the great crisis of 2008, the group has been piling up setbacks: nationalization of its assets in Argentina, a prolonged downturn in oil and gas prices between 2014 and 2021, cuts in dividend payouts, credit rating downgrades, and so on.
However, the company is now repositioning itself, selling off various non-strategic assets - as it did recently in Canada - and selling a quarter of its production & exploration segment to the American investment fund EIG.
It should be noted in passing that Repsol values this segment at EUR18 billion, almost its entire enterprise value at the time. Repsol produces 550,000 barrels equivalent per day - mainly natural gas - and has 2 billion barrels in proven reserves.
The remaining assets, however, are worth their weight in gold, in particular the six refineries - a strategic and non-reproducible infrastructure - with a million barrels per day of capacity as well as a network of 4,600 service stations in Spain, Portugal, Mexico and Peru; and 4GW of renewable energy generation.
With its refineries, Repsol intends to become a heavyweight in biofuels and other low-carbon alternatives, such as hydrogen. It's a bold industrial gamble, but there are few players capable of taking it up; the Spaniard group is clearly one of them.
The valuation of its assets shows a substantial discount to its market capitalization over the last ten years or more. It would therefore be risky to rely on such a method to justify an investment at this price, especially since Repsol, like the other majors, is still valued primarily on the basis of its dividend yield.
Five years ago, the Board of Directors launched a major share buyback program. In total, between share buybacks and dividends, it is committed to returning at least EUR1.3 billion a year to its shareholders - with a review of this plan up to 2025.
For the time being, analysts seem to prefer the scenario of an upward revision of these returns of capital to shareholders. It is true that the reconfiguration of the portfolio is proceeding optimally for the time being.
Another notable success is the substantial reduction in net debt, which has been divided by six in ten years and is now insignificant.