Bloomberg News

Repsol Said to Ask Spain Regulator to Probe Share Trading

October 05, 2011

(Adds shares in fifth paragraph.)

Oct. 5 (Bloomberg) -- Repsol YPF SA asked Spain’s stock market regulator to investigate trading in the petroleum company’s shares over the last two months, according to a person familiar with the situation.

Spain’s biggest oil driller asked for a probe of “abnormal or unusual movements” in its shares in August and September, the person said, citing a letter from Repsol’s audit committee dated Oct. 3. It argues that volumes were higher than usual as were the number of Repsol shares being lent, said the person, who declined to be identified as the letter isn’t public.

Repsol Chairman and Chief Executive Officer Antonio Brufau is seeking ways to stall shareholders Petroleos Mexicanos and Sacyr Vallehermoso SA, who agreed Aug. 29 to pool their votes and push for Repsol to appoint a separate CEO. He began proceedings last week to have the two investors’ representatives thrown off the oil company’s board.

Shares in Repsol rose 44 cents, or 2.3 percent, to 19.62 euros in Madrid as of 10:52 a.m., in line with the 2.4 percent gain in the Stoxx 600 Oil & Gas Index. Sacyr climbed 0.5 percent to 4.07 euros as Spain’s IBEX 35 benchmark advanced 1.5 percent.

Pemex said in a Sept. 2 filing it had added 4.6 percent of Repsol shares to its stake, bringing the combined holdings of the two partners to almost 30 percent.

A spokeswoman for the regulator, the National Securities Market Commission, said the agency received a letter from Repsol yesterday asking it to look into share movements. She asked not to be named, in line with official practice. A spokeswoman for Sacyr declined to comment. A Pemex press official, who wouldn’t be named citing internal policy, said the company had no comment.

Dividend Payments

Sacyr Chairman Luis Del Rivero, who also serves as vice chairman of Repsol, is racing to meet a December deadline with his lenders to refinance a 4.9 billion-euro ($6.5 billion) loan he used to buy 20 percent of Repsol in 2006.

Del Rivero has been pressing Brufau to increase Repsol’s dividend payments since at least December 2009 as the global recession damped profit in its construction business. He was forced to put up more collateral against the loan in 2008 after Repsol shares fell.

Brufau instead has devoted Repsol’s resources to searching for more oil and has added the equivalent of about 2 million barrels of crude in the past five years. The company is also spending 5.3 billion euros to increase the efficiency of its Spanish refineries.

Request Denied

Spain’s energy regulator last week rejected a separate request from Repsol to intervene in the struggle. The oil company had said Pemex should need permission for its stake under rules governing foreign investment in Spain.

For Pemex, the benefits of a closer cooperation with Repsol will be worth $4.27 billion, the Mexico City-based company said in a Sept. 21 filing with Spanish regulators. Increasing its stake will help Pemex take on “highly complex” projects and deep-water drilling, the company said.

Repsol has raised its capacity for offshore drilling developing fields such as Guara in the ocean off Brazil under Brufau’s plan to boost oil production.

--Editors: Alex Devine, Todd White

To contact the reporters on this story: Ben Sills in Madrid at bsills@bloomberg.net; Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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