Repsol sank to a net loss of nearly $4 billion for the full year of 2020 as the devastating effects of the Covid-19 pandemic hammered global demand and commodity prices, leading to significant writedowns.

The Spanish major did, however, manage to post a positive adjusted net profit for the year and significantly lowered its debt.

The net loss hit €3.29 billion ($3.96 billion) as the company lowered its oil and gas price forecasts and impaired the value of exploration and production assets, with an overall "special item correction" of €2.91 billion.

For 2019, the net loss was €3.82 billion, mainly due to one-off costs booked in the fourth quarter of that year related to its goal of becoming a net-zero emissions company by 2050.

"The drop in international commodity prices impacted the value of Repsol’s inventories negatively, to the amount of (negative) €978 million over the whole year of 2020," Repsol added.

"The Covid-19 pandemic unleashed an unprecedented crisis worldwide. For the energy sector this had consequences due to a sharp drop in the price of hydrocarbons and its derivatives as well as a historic collapse of demand," the Madrid-based giant said.

"The average price of Brent crude fell 35%, at its lowest plummeting to $15 a barrel in April, while the Henry Hub gas price declined 19%."

The adjusted net income for 2020 was, however, €600 million, with operating cash flow hitting €3.2 billion across the group.

Adjusted net profit for 2019 was €2.04 billion.

Adjusted net income for the fourth quarter last year was €404 million, which Repsol said was similar to 2019's final period.

For the fourth quarter of 2019, adjusted net income was €405 million.

Repsol posted a net loss of €5.28 billion for the fourth quarter of 2019 as it recorded special items totalling €5.71 billion.

This included a nearly €4.85 billion impairment on production assets, mainly in the US and Canada, after Repsol assumed a lower price scenario, which it said was "consistent with the foresight to the energy transition and with the Paris Agreement’s climate goals".

Debt cut in 2020

For 2020, net debt was cut by €1.18 billion to end the year on €3.04 billion.

Average production last year was 648,000 barrels of oil equivalent per day.

Repsol completed nine exploration wells last year, with seven making discoveries, including in the US, Colombia and Mexico.

Two discoveries made in quick succession in April on Block 29 in Mexico's Salina basin were "especially noteworthy", Repsol.

These were the Polok and Chinwol wells, both of which struck "high quality reservoirs with excellent properties", Repsol said in May.

Low-carbon push

Late last year, Repsol unveiled its strategic plan for 2021 to 2025, aiming for a carbon reduction intensity of 12% by 2025, 24% by 2030 and 50% by 2040.

Last year it reduced its carbon intensity by 5% compared with the 2016 baseline - well above its initial 3% target.

However, adjusted for the reduced activity level due to the coronavirus pandemic, the reduction was 3.7%.

Chief executive Josu Jon Imaz said: “In 2020, we faced an unprecedented scenario and laid the groundwork for the company's future.

"We have again demonstrated the robustness of our project, assumed an essential public service role, and confirmed, once again, that our company is useful to society.

“The industry has demonstrated that it is part of the backbone of the Spanish economy and one of its main driving forces. It plays a crucial role in the recovery from the crisis, and also in contributing to a more decarbonised world, using all available technologies.”

Finance

Repsol posts $4bn full-year loss as writedowns bite bottom line