Repsol wraps $6.93bn Argentina sales

Repsol deal: Antonio Brufau-led company clears out position in Argentina

Repsol has wrapped up the process of selling off its assets in Argentina, ultimately realising $6.93 billion after control of its local unit was expropriated by the government in 2012.

The Spanish oil giant said on Friday it had sold off the last of the $5 billion in government bonds it received as compensation for its 51% stake in top Argentina oil company YPF.

That deal came in the wake of a bitter two-year negotiation in which Repsol claimed it was owed far more, closer to $10 billion.

All told Repsol realised $4.99 billion from the bond sales to JP Morgan.

The Spanish company also divested the last fraction of its stake in YPF -- a slim 0.48%.

Repsol had struck a deal earlier on 7 May with Morgan Stanley to sell its 11.86% position.

That made for total proceeds of $1.31 billion from Repsol's 12.34% stake it had remaining after the seizure.

The populist administration of Cristina Fernandez de Kirchner in 2012 expropriated Repsol's majority share in the company, saying it had failed to invest enough in turning around declining production in Argentina.

Repsol vehemently denied these accusations. The seizure also came amid intensive buzz around the discovery of the promising Vaca Muerta shale and Argentina's unconventional resource potential, deemed as among the best in the world according to US government data.

"The proceeds from these sales reinforce of the company’s financial capacity, a fact which has been recognised by credit rating agencies with upgrades of Repsol’s rating," the company said.

Analysts have looked favourably on the sales, with the Moody's ratings agency bumping up the company's credit rating to Baa2.

"The early monetisation of the Argentina sovereign bonds and the sale of the remaining stake in YPF remove the overhang associated with the YPF expropriation and significantly enhance the group's financial flexibility," said Francois Lauras, the agency's lead analyst for Repsol.

"This should enable the Spanish oil and gas company to continue strengthening its upstream portfolio while ensuring some material improvement in its overall financial profile."

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