Spanish oil company Repsol updated its 2016-2020 Strategic Plan on Wednesday, with revisions to increase its oil production from 695,000 barrels per day (bpd) in 2017 to 750,000 bpd by 2020.
The plan was updated after Repsol achieved all the goals set out in the initial plan two years ahead of schedule, a press release said.
The company also aims to continue to increase shareholder distribution to reach €1 per share in 2020, with scrip dividends accompanied by share buybacks that will prevent the dilution of those who choose cash payments.
"One of the key aspects of the Strategic Plan is to further increase shareholder distribution by an annual average of 8 percent, raising it to €0.95 per share in 2019 and to €1 per share in 2020 through scrip dividends, along with share buybacks that will prevent the shareholder dilution and increase earnings per share," the statement said.
The renewed strategy is also based on profitable business growth, and Repsol plans to invest €15 billion ($17.6 billion) over the next years: 53 percent in its upstream exploration and production unit and 45 percent in downstream - refining, chemicals, marketing, lubricants, trading, LPG, gas & power, and low carbon assets.
Of the €15 billion, Repsol will allocate €2.5 billion ($2.94 billion) to low-emissions energy projects and develop new long-term business opportunities, while €1.5 billion ($1.76 billion) will be allocated for new initiatives, especially in the downstream unit, for the petrochemicals business expansion, service stations, lubricants and trading.
As for Repsol's exploration and production business, the company is set to increase its production of hydrocarbons by 8 percent through 2020, and achieve greater returns while optimizing its asset portfolio.
"In line with the updated Strategic Plan, the upstream unit will invest €7.9 billion by 2020. Approximately 60 percent of this total will go toward growth projects and exploration, in order to increase production and ensure an optimal level of reserves in the medium and long term," the statement said.
"Repsol will prioritize onshore and shallow-water projects, areas in which it has a competitive advantage," it added.
The company also plans to globally expand its downstream business, including the service station business in markets such as Mexico, where it has opened 30 facilities in three months, and in Peru, where the company currently has nearly 500 points of sale.
"In other businesses, such as lubricants and LPG, for which Repsol is the top operator in Spain, growth will be propelled in Asia and South America, in the case of the former, and in Morocco and the south of France, in the case of the latter," it said.
With all these initiatives, Repsol estimates that the downstream unit's cash flow from operations will increase by €700 million ($823.5 million) by 2020 as compared to 2017: a 27 percent increase over the period.
-Cut carbon dioxide emissions
The company also underlined its commitment to the fight against climate change as adopted at the COP 21 Paris Summit, saying it would reduce CO2 emissions by 2.1 million metric tons by 2020 from 2016 levels despite the expected growth in business.
Repsol's goal is to reach a low-carbon generation capacity of approximately 4,500 megawatts, it said.
"The 2018-2020 Strategic Plan is self-financed at a prudent Brent price of $50 per barrel, at which the company can guarantee a high degree of financial flexibility and a gearing ratio that is well below the industry average," it added.
By Hale Turkes