High oil and gas prices helped Spain's Repsol to post earnings above market expectations, giving it more financial firepower to spend on low-carbon operations investors are increasingly demanding of energy companies.
Benchmark Brent crude oil and Henry Hub gas rose 70% and 86% respectively during 2021 as tight gas supplies collided with rising demand as economies recovered from COVID-19 shutdowns.
For Repsol, this translated into a 70% annual increase in free cash flow from operations to €5.45 billion ($6.19 billion) for 2021.
Earnings beat forecasts provided by the company, with adjusted net income at €872 million against the company's analyst consensus of €783 million.
Earnings before interest, tax, depreciation and amortisation (EBITDA) at current cost of supply hit €7.07 billion in the full year, above the company's target of €6.7 billion.
Regulatory And Market Pressure
In line with larger rivals including BP and TotalEnergies, Repsol is responding to regulatory and market pressure to reduce planet-warming carbon emissions by investing in renewable energy.
It plans to allocate 35% of investments between 2021 and 2025 to low-carbon activities. This plan includes an attempt to sell a stake in its newly created renewable energy generation unit.
Repsol also boosted its dividend 5% last autumn to €0.63.
The company, meanwhile, has been grappling with an oil spill off the coast of Peru on 15 January, which it blamed on unusual waves triggered by a volcanic eruption thousands of miles away in Tonga.
Repsol said on Thursday that 'intensive work' was under way to clean up the oil, which it estimated at 10,396 barrels.