Galp Energia SGPS SA (GALP), the Portuguese energy company investing in Brazil, increased oil output in the first quarter and processed 49 percent more crude.
Average working-interest production rose 19 percent from a year earlier to 22,600 barrels a day, beating a February target of 22,000 barrels a day. Average net entitlement output leapt 72 percent to 16,500 barrels a day, Galp said today in a statement.
The Lisbon-based oil company, Portugal’s largest, plans to invest 1.2 billion euros ($1.6 billion) a year from 2013 to 2016 as it explores in Brazil’s offshore Santos Basin, where its Lula project is located, and in Angola. By expanding access to crude supplies, Galp is seeking to curb dependence on refining and sales of fuel in Portugal and Spain.
The stock advanced as much as 1.9 percent to 11.895 euros in Lisbon, and traded at 11.85 euros as of 8:41 a.m. local time. The shares have gained 4.2 percent this year, valuing the company at 9.8 billion euros.
Galp aims to exceed 300,000 barrels of oil equivalent a day in working-interest production by 2020. It has stakes in four offshore blocks in the Santos Basin, including 10 percent of Lula, the largest find in the Americas since Mexico’s Cantarell field in 1976. Lula, formerly known as Tupi, holds an estimated 6.5 billion barrels of recoverable oil and equivalents. Galp and Brazil’s Petroleo Brasileiro SA (PETR4) are also partners at Cernambi, which holds 1.8 billion barrels of estimated reserves.
Galp processed 20.3 million barrels of oil in the quarter, up 49 percent, after year-earlier results were affected by the suspension of the Sines refinery to install new units. The company is investing in upgrades at its Sines and Oporto plants to increase diesel production. The Oporto facility can process about 90,000 barrels a day, while Sines has a 220,000-barrel-a- day capacity.
The benchmark refining margin, a measure of profit from turning a barrel of crude into fuels, was negative at 60 U.S. cents in the quarter, compared with a negative margin of 50 cents a year earlier, Galp said today. Natural-gas sales climbed 7.5 percent to 1.73 billion cubic meters in the period.
Galp is due to report first-quarter earnings on April 27.
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