Galp profits x6 on back of higher oil prices

Portuguese energy company Galp posted profits of €155 million for Q1 – six times greater on the like-for-like period in 2021.

The result was fuelled partly by an increase in the price of oil which meant that oil extraction enjoyed an excellent performance.
The EBITDA for upstream was €803 million, double of what it had been a year ago “reflecting an increase in product and increases in petroleum and gas prices, supported by improved oil trading conditions and new gas contracts”, says the oil company.
Galp is estimating an upstream result of €2.2Bn in 2022. Other Galp business areas such as comercial (sale of fuel at petrol stations) saw an EBITDA of €56 million in the first three months of the year, which represented a fall of 19% like-for-like.
Sales of petroleum and gas products increased 25% and 13%, respectively, but the result went down because of the pressure on gas and energy activities. “Moreover, from this quarter, the Comercial segment included the reallocation of New Business Division growth platforms.”
In the introduction to it Q1 results the company’s CEO Andy Brown states: “Galp started the year with a strong set of results, as we improved our operational performance and successfully captured the stronger macro conditions. OCF reached €638 m, a 43% increase YoY, although the extreme volatility and high commodity price environment pressured some of our downstream activities, as Galp does not immediately pass these higher prices on to our end clients.
However, despite this and a further significant working capital build, our Net Debt/EBITDA fell below 1x. We continue to deliver on our strategy to grow and thrive through the Energy Transition.
We are executing on time and budget with our key Upstream growth projects, whilst progressing in the transformation of our downstream activities. Our renewable capacity in operation is already 1.2 GW, but we also doubled our total renewable energy funnel to 9.6 GW, which adds credibility to our 2025 target of having >4 GW operating.
We are also steadily laying the foundations for our new low carbon energies endeavours, sanctioning a 2 MW green hydrogen pilot and selecting Setúbal as the location to build our lithium conversion unit.
“Galp has built an exciting growth funnel, which sets us apart. During these unprecedented and challenging times, our heart goes out to the people of Ukraine. I am proud of the position taken by Galp to suspend deliveries from Russia and to provide money and resources to support the humanitarian efforts”, states Andy Brown.

They key points are:

RCA Ebitda reached €869 m, 74% higher YoY, driven by a strong Upstream and refining performance:

• Upstream: RCA Ebitda was strong at €803 m, reflecting a higher production and increased oil and gas realisations, supported by improved oil trading conditions and new equity gas contracts.

Commercial: RCA Ebitda was €56 m, 19% lower YoY, despite the increase of oil volumes sold during the period, pressured by the price environment in Iberia, namely on gas and power activities. Additionally, starting this quarter, the Commercial segment includes the reallocation of growth platforms from the New Businesses division (decentralised energy and mobility management solutions).

Industrial & Energy Management: RCA Ebitda was just €2 m, as the strong Industrial performance was offset by a lag in pricing formulas for oil products supply.

Renewables & New Businesses: no relevant RCA Ebitda as most of the operations are not consolidated. The pro-forma Ebitda of the Renewables operations reached €30 m in the period, capturing the strong power prices during the period and increased generation. Group RCA Ebitda at €538 m, up 90% YoY, including an impairment of €120 m related with exploration and appraisal assets in Brazil.