Repsol will depreciate its oil wells by 4.8 billion, which will impact its 2019 result
Very important announcement of Repsol The Spanish oil company wants to stop being classified exclusively as an oil company to become an energy company with interests in renewables and in all types of generation. Therefore, the multinational has announced a "reset of its strategy" after a meeting of the board of directors on Monday, in which they have approved an ambitious change agenda for Repsol to have zero emissions in 2050 as requested by the Paris agreements .
Perhaps one of the most striking points, being the ones that will affect the company in the short term, is the Asset depreciation that Repsol will carry out for 4,800 million euros. The company wants to send a signal with this measure that its future commitment moves away from the business models that have characterized it over the past decades.
Repsol follows other energy companies like Endesa that already depreciated polluting assets before, and in this case it will do so with its ‘upstream’ assets, market sources indicate to this newspaper. This is their oil fields, whose strategy will also change as they traditionally secured reserves of up to fifteen years and will now work with shorter cycles, of eight years at most.
According to the company, this depreciation "will not have an effect on cash generation nor will it affect the announced proposal to increase shareholder remuneration."
To prepare the agreements announced by the company after its board of directors on Monday, the future agenda of estimated fuel prices has been established, everything that influences compliance with the Paris Agreements has been updated, all have been analyzed the assets and their accounting adjustment.
The objective that the company now has is that profitability is prioritized above the volume and has ensured that it has technology to assume 70% of the target set while the remaining 30% would have to come with future advances.
On the other hand, Repsol has also announced that it will present its new 2021-2025 strategic plan to investors in the first half of 2020. The oil company already plans to go abroad to acquire renewable energy projects, mainly photovoltaic and wind.
Repsol will work so that all those associations and initiatives in which it participates are aligned with the fulfillment of the objectives derived from the Paris Agreement. "In 2020 the company will publish a report with the analysis of said alignment in all the associations and initiatives in which it participates, unsubscribing from all those that before the date of publication have not ceased actions or messages incompatible with the fight against climate change, "he said in a statement to the CNMV.