REPSOL'S PRODUCTION UP 11%

Spanish integrated oil and gas company, Repsol, said it was able to produce 11 per cent higher in the first quarter of 2013 thanks in part to "better volumes from T&T." Speaking during a conference call after the release of the company's first quarter 2013 results in Madrid, Repsol Chief Financial Officer Miguel Martinez said: "Production output was 36,000 barrels of oil equivalent per day (kboed), 11 per cent higher than in the first quarter 2012. Since five out of the 10 keep growth projects of the strategic plan 2012-2016 have come on stream, together with better volumes from T&T. We are confident that we will achieve the 10 per cent average growth targeted for 2015. Incremental production will come from the ramp up of Mid-Continent in the U.S. and Sapinhoa in Brazil and the start you of our Phase 2 to of Margarita in Bolivia. On the other hand, Kinteroni is already technically prepared to come on stream, but the delay is mainly due to the negotiation with the final contractor arrangements to be completed with the common share partnership and Trinidad will under go planned maintenance."

The increased production volumes had a positive impact of €72 million, he said. For Repsol, crude prices remained flat while gas prices increased by 26 per cent having a positive effect of €43 million. Increased depreciation charges had a negative impact of €45 million. "Depreciation charges per barrel are higher in the early stage of production," Martinez said.

"We also have cost increases of €63 million mainly due the new production of Sapinhoa in Brazil and the startup of the new projects in Russia. Sapinhoa produced 20,000 barrels per day in gross terms during the quarter, but bears the cost of an FPSO (floating production storage and offloading ship) with the capacity of 120,000 barrels per day. Two additional production wells will be connected before year end," he said.

T&T again came up during the call when analyst Anish Kapadia from Tudor Pickering Holt asked: "On T&T, it’s the largest producing asset in your portfolio. We’ve seen the reserve life that fall down to seven years at what’s now a reduced production rate. Just wondering how much of a concern that is and how you see production over the next few years?"

To which Martinez responded: "In relation to T&T, I mean, we are at plateau there and I think we have reserves in our books for the next seven years of production, approximately."

Kapadia then asked if a fairly significant decline should be expected from T&T over the next few years. Martinez answered: "No, the only variance that you will see throughout the year will be due to maintenance. There were some maintenance expected for the first quarter that has been delayed for the second one, but as I mentioned, we are at a plateau, and I don’t see any decline in T&T production other than those that are forced by maintenance."

In conversation with Santander analyst, Jason Kenney, Martinez said Repsol is getting US$20 per million British thermal units (mmbtu). He said: "I think that the only difference that the (analysts') consensus have with us in this quarter, was our North American liquefied natural gas (LNG) assets. I mean the rest of them were really accurate and probably nobody was expecting, too, that we will be selling gas in the Eastern Coast US$20 per million Btu."

NORTH AMERICA

Repsol's North American LNG also exceeded expectations. Global financial services company, Morgan Stanley described Repsol's results at the end of the 2013 first quarter as "aided by ‘one-off’ LNG strength" and said the net income was driven by "stand-out LNG result."

Morgan Stanley called Repsol's results "impressive." In a report authored by Martijn Rats, Jamie Maddock, Robert Pulleyn, Haythem Rashed (who attended the conference call), Sasikanth Chilukuru, Aaditya Chintalapati and Paul Loudon, Morgan Stanley said: "Repsol reported adjusted net income of €676 million, an impressive 25 per cent higher than (analysts') consensus expectations of €540 million. At the operating level, Repsol beat expectations by 15 per cent. Whilst all three divisions delivered better than expected results, the LNG division was particularly strong delivering a record €311 million in adjusted earnings before interest and tax (EBIT). The business benefited from strong profitability in North America where a cold winter supported better margins and volumes. In total, the North American business accounted for €129 million or over 40 per cent of the overall LNG result. The company has indicated it does not expect to repeat this result on a sustainable basis. Full year 2012 operating income from the North American LNG division was around €63 million."

While Trinity Exploration and Production plc pared away US$1.3 million in losses, falling from US$ 14.3 million in 2011 to US$13 million in 2012, according to its May 8, (2013) results report, two shareholders to watch have increased their shareholding in the company.

The Legal & General (L&G) group of the United Kingdom, the company's single largest shareholder, and Trinity Chief Executive Officer (CEO) Joel Monty Pemberton increased their shareholding on the same day of the release of the loss results for the year ended December 31, 2012.

L&G Fund Manager Matthew Evans had said in an April 9 interview that Trinity plc is undervalued. Dr Jim Lee Young, a former energy chamber president and former chief executive of 10 Degrees North, one of Trinity's predecessors, had said the same earlier, on February 25.

The share hit a low of 104 pence on May 3. Pemberton and L&G had bought on May 8. In a regulatory disclosure document, the London Stock Exchange said: "On May 8, 2013, Joel Pemberton, Chief Executive Officer, purchased 28,500 ordinary shares in the capital of the Company at a price of £1.08 per share. Following this purchase Joel Pemberton is interested in 522,815 ordinary shares in the Company, representing approximately 0.55 per cent of the issued share capital of the Company."

Pemberton was joined on May 9 (2013) by Jonathan Murphy, a non-executive Director, who purchased 100,000 ordinary shares in the capital of the Company at a price of £1.08 per share. Following this purchase Jonathan Murphy is interested in 4,977,421 ordinary shares in the Company, representing approximately 5.25 per cent of the issued share capital of the Company.

L&G Investment Management Limited (LGIM) on the same day raised its shareholding from 10,975,411 (as on February 26) to 14,485,411 or 15.27 per cent of the company. Now, the L&G Group and LGIM have both crossed the threshold of 15 per cent ownership of the company.

The market has already reacted to the directors' and major shareholder's purchases. At press time Monday, Trinity was trading slightly higher, at 112 pence, but still lower than its February 14, initial public offering (IPO) of 120 pence.

The financials released on May 8 said Trinity had revenue of US$36.2 million at the end of 2012, compared with US$22 million in 2011.

Its loss before tax was US$23.9 million, higher than 2011's loss of US$17.2 million, after write off for unsuccessful exploration costs of US$21.9 million.

Its loss after tax was US$13.0 million, down from 2011's US$14.3 million. Its capital expenditure (capex) for the year was US$69.8 million, up from 2011's which totaled US$41.3 million, comprising Trintes field development costs (US$22.9 million) and exploration costs (US$46.9 million). Cash and cash equivalents at year end 2012 were US$9.7 million, down from the 2011 number, US$59.4 million.