Galp posts 90% profit leap on soaring oil prices and refining margin
(Reuters) - Portuguese oil and gas company Galp Energia reported a 90% jump in adjusted second-quarter profit on Monday, citing soaring oil prices and a sharp increase in its refining margin.
A rapid recovery in demand after pandemic lockdowns and a surge in energy prices, driven by Russia's invasion of Ukraine, have boosted profits for oil companies.
Galp said it "successfully captured the favourable market conditions" in upstream activities, refining and renewables.
"We had a strong performance across all business segments. Galp today is in a much more robust (financial) position," chief exceutive Andy Brown told analysts on a conference call.
The Lisbon-listed company's shares were up 1.99% at 9.93 euros in afternoon trade, outperforming a 0.48% rise for the broader European Stoxx index for oil producers.
Adjusted net profit was 265 MM euros ($270 MM) in the three months to June 30, up from 140 MM euros a year earlier and above the 224 MM euros expected by 21 analysts polled by the company.
Galp's adjusted upstream core profit rose 88% to 878 MM euros, boosted by Brent crude prices that rose 65% year on year to $113.9 a barrel.
The higher prices more than offset a drop in its share of oil and gas production from the projects in which it has a stake. That fell by 7% to 119,600 barrels of oil equivalent per day.
Galp's refining margin jumped to $22.30 a barrel in the quarter, up from $2.40 in the same period last year, when Portugal was under COVID-19 restrictions, and $6.90 in the previous quarter.
The improved global oil market backdrop prompted Galp to raise its guidance on full-year core profit to 4 B euros, up from 2.7 B euros, in line with what Jefferies analysts said was a market consensus estimate of about 4.1 B euros.
Asked if Galp could take advantage of favourable market conditions to lock in value through the disposal of upstream assets, Brown was non-committal.
"We have guided that is something that we will continue to look at, that is all we want to say (now)," he said.
Galp cut its net debt by 28% to 2.18 B euros in June, equivalent to 0.7 times its core profit against 1.0 times a year ago. ($1 = 0.9810 euros)
(Reporting by Sergio Goncalves Editing by David Goodman and Barbara Lewis)
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