Repsol Closes $4.1 Billion Sale, May Be Looking To North America With $10 Billion To Spend

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Close Date
Estimated Price
$4,100.0MM
Description

Purchased LNG assets in Peru and Trinidad and Tobago including leases for ship charters.

Repsol SA’s sale of liquefied natural gas assets to Royal Dutch Shell Plc for $4.1 billion strengthens the largest Spanish oil company’s balance sheet and is eyeing assets in North America.

Chairman Antonio Brufau said two months ago that Repsol will use proceeds from asset sales to expand the company overseas after its YPF unit in Argentina was seized in 2012. Repsol may spend as much as $10 billion on acquisitions, with and is studying unconventional assets in North America, he said.

The sale of Repsol’s assets in Peru and Trinidad and Tobago, in a deal announced February, and the disposal of a stake in a power plant to BP Plc will cut Repsol’s net debt by $3.3 billion, the company said in a Jan. 2 statement. Its asset sales have reached to more than $7 billion, above targets for 2012 and 2016, Repsol said.

As part of the transaction, Shell will also assume $1.6 billion of balance sheet liabilities relating to existing leases for LNG ship charters, substantially increasing the shipping capacity available to Shell's world-class LNG marketing business.

The company, a producer in Angola, Libya and Bolivia, is seeking to rebalance in favor of developed countries with legal stability, Brufau said in a November interview.

Repsol, down 23% since the beginning of 2012, fell 0.6% to 18.21 euros as of 10:15 a.m. on Jan. 2 in Madrid.

The company is considering disposing of its holding in Gas Natural, Spain’s largest gas utility, as the sale of Repsol’s LNG assets to Shell removed the strategic reason for the stake. Repsol won’t sell to return cash to shareholders, Brufau said.

Repsol is talking to Argentina over compensation for YPF. The two sides reached a preliminary deal in November. Argentina offered $5 billion in 10-year bonds, a person briefed on the proposal said in November, declining to be identified. Repsol initially demanded $10.5 billion for its 51% stake.