Spanish energy company Repsol trimmed its full-year earnings outlook on Wednesday as lower oil prices and refining margins weighed on profits, but a share buy-back and better than expected results bolstered its stock.
Repsol proposed buying and cancelling 5% of its outstanding shares, helping send its stock more than 5% higher in early afternoon trade as investors forgave a fall in second-quarter adjusted net profit.
The result - 497 million euros ($554 million) when adjusted for one-off gains and inventory effects - was 9% lower than the same period of the previous year but beat a forecast of 478 million euros collected by the company from 25 analysts.
Repsol tweaked its guidance for full-year core earnings before interest, tax, depreciation and amortization to 7.8 billion euros, from a previous 8 billion euros.
Expectations for the second quarter had been low partly because oil prices have been dragged down this year by rising supply from the United States and a weaker demand outlook due to slowing economic growth.
That has prompted the Organization of Petroleum Exporting Countries (OPEC) to prop up the market by limiting supplies.
Repsol's refining margin plunged 34% in the April to June period from the previous quarter, to $3.50 a barrel. Brent crude averaged $68.9 per barrel in the period, compared with $74.4 last year.
Chief Executive Josu Jon Imaz said the company expected the refining margin to improve later in the year, but said he now calculated it could squeeze $6 out of each barrel, compared with a previous estimate of $7.6.
Nevertheless, Imaz said Repsol might carry out further share buybacks in future.
Repsol said new wells in Colombia and Canada, the purchase of a stake in Norwegian oil field Mikkel and production from the deepwater Buckskin project in the United States had bolstered its upstream division.
Downstream, lower refining margins were partially offset by higher sales at its chemicals unit and in Peru, as well as a stronger U.S. dollar versus the euro.
A long-standing headache caused by outstanding debts in Venezuela eased, as deliveries of five cargoes under an oil-for-debt deal chipped away 45% of what it was owed during the first half of the year, Imaz said.
($1 = 0.8974 euros)
(Reporting by Isla Binnie; Editing by Paul Day, Deepa Babington and Jan Harvey)