Repsol Mulls Options for Brazil Upstream

Spain’s Repsol is considering ways to finance investments it must make to develop the large amounts of Brazilian offshore oil reserves that have recently been discovered. It is already deploying EUR500m in capex through 2012 to develop the Carioca field off the coast of Rio alongside Petrobras and Grupo BG, according to a recent presentation. And it is considering similar arrangements with other operators, as well as farm-outs of portions of its other fields, according to a company executive. Repsol has also been cited as a candidate to list shares in Brazil to help finance growth. Investors and bankers agree it would make a strong candidate for the BDR market, given its scale and the significant amount of investment it can make in the country in coming years. “It’s still premature to talk about an IPO,” says the executive, who does not deny the company has considered such a move. Elsewhere in LatAm, Repsol continues to seek strategic alternatives for its stake in Argentina-based Repsol YPF, the $17bn market cap company in which it holds an 84% stake. Plans for a $4bn 2008 IPO were shelved as market conditions for Argentine issuers became difficult and its local partners – the Argentine Eskenazi family, which owns a 15% stake and an option to purchase another 10% – are working with Repsol to find a buyer. “We want to sell down to around 55% or so,” says the company executive, who emphasizes Repsol’s interest in maintaining a controlling stake in YPF. Credit Suisse was hired to manage the IPO and is understood to still be involved with YPF.