Galp witnessed an increase in their profits, mostly due to the company's internationalisation strategy, focused on Brazil. Galp's project with the Italian ENI, of a drilling in Algarve, was suspended.
Profits at Portuguese oil and gas group Galp rose 35% in the third quarter to €251 million, according to information filed with the Portuguese Securities and Exchange Commission (CMVM) on Monday.
Galp, in the information sent to the CMVM, pointed out that this growth was due to the progress in the company’s internationalisation strategy, focused on Brazil, and added that the net result based on international financial reporting standards (IFRS) was €235 million.
Average working interest production was up 10% year-on-year in the third quarter to an average of 103,800 barrels per day supported by the contribution from FPSO number 7 (Floating Production, Storage and Offloading unit) in Brazil “running at a plateau since April.”
According to figures for the third quarter of the year, net entitlement – after paying taxes in kind to the countries in which it produces and which fully revert to Galp’s results – grew by 11% to 102,300 barrels per day. About 90% of the group’s production was oil and the remaining 10% was natural gas.
According to the filing, the increase in production was limited by a planned maintenance of three production units in Brazil and partially offset by the start of production of the first of two units planned for the Kaombo project in Block 32 in Angola.
The volumes of natural gas (NG) and liquefied natural gas (LNG) sold in the third quarter of 2018 increased by 18% to 2,024 mm3 and electricity sales amounted to 1,262 GWh, a year-on-year reduction of 2%, also following planned maintenance activities at the Matosinhos cogeneration unit.
The group’s investment in the third quarter totalled €234 million, of which 81% was allocated to the exploration and production business. Between January and the end of September, investment reached €597 million.
At 30 September, net debt stood at €1.899 billion, €162 million more than at the end of June 2018, following the payment of dividends and a subscription bonus related to bidding rounds in Brazil in September.
Drilling in Alentejo is cancelled, due to legal constraints
Moreover, Galp isn’t going forward, according to a note published this Monday, with the planned drilling in Alentejo’s coastal area, jointly with the Italian company ENI. Both have decided to “abandon the oil project in the bay area of Alentejo” and due to the many “judicial proceedings against this matter. we will not make any further comments on the issue”, they noted.
Galp (held 30% of the consortium) and Eni (70%) had until January to make the first oil drilling in the area, approximately 46 kilometres from Aljezur. However, the Court of Loulé, a Portuguese municipality, decided to file an injunction against the project, demanding it to be suspended.
Although Galp is regretful of the end of the project, they say they will “continue to invest in Portugal”.