Repsol Marks Argentina Exit With $1.3 Billion YPF Stake Sale

May 07, 2014 11:37 am ET

(Updates with YPF shares in fifth paragraph.)

May 7 (Bloomberg) -- Repsol SA sold almost all its remaining stake in Argentina’s YPF SA, marking a final break with the company two years after the government seized 51 percent of the country’s leading oil producer. YPF stock jumped.

Repsol sold 12 percent of YPF through Morgan Stanley for $1.26 billion, realizing a pretax gain of $622 million, the Madrid-based company said in a statement today. Spain’s largest oil company, which reports first-quarter earnings tomorrow, retains a stake of less than 0.5 percent after the disposal.

President Cristina Fernandez de Kirchner ordered the nationalization of YPF in April 2012, alleging parent company Repsol had failed to invest enough in maintaining oil production. Argentina and the Spanish producer, which had called the seizure illegal, agreed on a $5 billion compensation package earlier this year.

Armed with the cash from Argentina and the proceeds of today’s deal, Repsol plans to spend as much as $10 billion acquiring oil and natural gas production assets, mainly in developed countries, Executive Chairman Antonio Brufau has said.

Repsol shares, up 7.1 percent in the past year, advanced 0.4 percent to 19.39 euros at the close in Madrid. YPF’s American depositary receipts jumped 5.6 percent to $29.87 in New York at 11:33 a.m. Each ADR is worth one regular share.

Pursuing Acquisitions

Last week, Repsol appointed Josu Jon Imaz San Miguel as chief executive officer, a post Brufau gave up while continuing to head the board. Imaz, who had been in charge of the refinery division, will pursue growth through acquisitions, the company said when it announced the appointment.

Repsol’s production reached 346,000 barrels of oil a day in 2013, up from 332,434 a year earlier, according to its website. The company’s 275 percent reserve replacement ratio in 2013 was the second highest among 15 integrated oil companies tracked by Bloomberg Industries.

The Spanish producer had threatened to sue any companies that partnered with YPF in Argentina as long as it was seeking compensation for the nationalization.

Argentina was looking for partners to help YPF develop shale reserves in the Vaca Muerta formation in southwestern Argentina. In 2012 it created a venture with Chevron Corp. to work jointly in part of the area.

Argentina plans to issue as much as $6 billion in sovereign bonds to meet the compensation payment. The Spanish company has said it intends to monetize the securities within a couple of years.