Aberdeen-headquartered Repsol Sinopec Resources UK has seen its profits more than treble on the back of higher oil and gas prices.
The North Sea operator has released its 2022 accounts, with profits totalling $601.5m, up from $186.8m the prior year.
Revenues climbed by more than $400m to $1.4bn, with the Spanish and Chinese-owned firm citing average increases of 45% year-on-year for oil and gas prices.
Repsol Sinopec owns several assets in the UK sector – many of which are mature and expected to be decommissioned – and it delivered a clear signal on those spending plans.
Over the next 10 years it said it expects to spend $2.2bn, of a total of $3.1bn expected over the next 30 years.
This is the first set of accounts from the firm since Repsol and Sinopec ended a long-running arbitration with a $2.1bn deal in May, which will see Spain’s Repsol become sole owner of the UK business.
© Supplied by Repsol SinopecTransfer of Sinopec’s 49% stake to Repsol is expected to conclude by the end of the year.
Repsol Sinopec Resources UK CEO, Luis Polo, said: “Thanks to the hard work and commitment of our workforce, as well as an increase in commodity prices, 2022 delivered a strong operating profit of $685 million. The company generated net increase in cashflows of $493 million after investing $183 million in capex activities.
“While increases in hydrocarbon have positively impacted the company’s results, we continue to operate in a challenging context, but remain focused on the delivery of our business plan and our aim to consistently deliver results against our corporate strategy – which is focussed on safe and sustainable operations from our producing assets, efficient decommissioning and emissions reduction.”
Production during 2022 totalled 38,822 barrels of oil equivalent per day, up 893 barrels per day on the prior year, due to production efficiency, particularly in the Flotta and Montrose/ Arbroath areas.
The Aberdeen-based firm had an average of 859 employees through the year.
Tax and asset exchange
Total liabilities including trade and other payables and deferred income tax liability, totalled $3.5bn.
Repsol Sinopec recognised a total tax charge of $63.9m – at a 40% rate that doesn’t include the 35% windfall tax – for the year ending December 31, 2022.
Explaining this, it said: “Following the introduction of the Energy Profits Levy (“EPL”) in May 2022, the combined tax rate for E&P companies increased to 75%.
“However, given that EPL was only introduced part way through the period it was considered more appropriate to maintain the expected tax rate at 40% for the year ended 31 December 2022.”
The firm has a “current” tax charge for the EPL of $50.7m, and deferred charges of $227.5m.
Under current legislation, the windfall tax is expected to end in March 2028. However Labour, projected to win the next general election, has vowed to increase it and remove an investment incentive linked to the levy.
In the accounts, Repsol Sinopec also noted an asset exchange with NEO Energy.
In 2021, the firm acquired a 65.9% unitised interest in the Flyndre field from Neo, in exchange for a 33.3% stake in Repsol Sinopec’s Affleck development.
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