Repsol, S.A.

Reported figures: Q2 2026 adjusted net income was EUR 1.8 billion, more than EUR 1 billion higher year over year; first-half adjusted net income was EUR 7.2 billion, up 135% versus the same period in 2025. Cash flow from operations was EUR 1.9 billion in Q2, up 24% year over year, and EUR 3.0 billion in the first half; excluding working-capital movements, operating cash flow was EUR 3.3 billion in the quarter and EUR 5.7 billion in the first half. Net debt was EUR 3.7 billion at quarter end, down EUR 1.1 billion from March, and gearing was 11.3% (3.1% excluding leases). Segment highlights: Upstream adjusted net income was EUR 371 million, up 19% year over year, with production at 558,000 boe/d, up 4% sequentially. Industrial adjusted net income was EUR 1.2 billion versus EUR 103 million a year ago; the refining margin indicator was 137% above Q2 2025 and 28% higher sequentially, with a quarterly premium of around $10/bbl. Customer adjusted net income was EUR 209 million, up 7% year over year, and low carbon generation adjusted net income was EUR 10 million. Guidance/outlook: Management said full-year 2026 production is still expected in the 560,000-570,000 boe/d range, likely toward the high end, and said July production has been around 580,000-585,000 boe/d in the first three weeks. Full-year net CapEx is expected to be around EUR 2.7 billion. The second buyback program was increased to EUR 500 million and will be executed before the end of October; a third and final buyback for 2026 will be announced with Q3 results, with the company reaffirming its target of distributing 30% to 40% of operating cash flow.

Josu Jon Imaz described the quarter as strong and said Repsol is benefiting from its Atlantic Basin footprint, flexible refining system, and diversified sourcing in a volatile geopolitical environment. He emphasized security of supply, disciplined capital allocation, growth in cash flow, and keeping shareholder returns as a top priority. He also highlighted Pikka’s first oil, the ramp-up in Alaska, and the strategic value of renewables as a self-financed growth business.

The financial commentary focused on the strength of cash generation and balance-sheet improvement despite a EUR 1.3 billion working-capital build, which management said was partly driven by higher inventory value and deliberate stock buildup to protect supply. Net debt fell to EUR 3.7 billion, helped in part by the deconsolidation of about EUR 0.6 billion of renewable debt tied to divested Spanish assets, and gearing was 11.3%. Management also said the new renewable transaction with Masdar should reduce net debt by EUR 700 million, with EUR 150 million of cash proceeds expected when it closes in the last quarter of 2026, while full-year net CapEx remains around EUR 2.7 billion.

Analysts pressed management on how much more cash could be returned, whether buybacks might hit technical limits, and whether special dividends could be considered. Management said it is not considering special dividends, plans to launch a third buyback in October, and still intends to deliver 30% to 40% of operating cash flow to shareholders; it also said the 10% share-cap authorization is not a current concern. Other questions focused on refining margins, with management saying biofuels contributed about $2 to $2.2/bbl of the quarter’s premium, and on maintenance, where it described Q3 as relatively clean. Analysts also probed Alaska and Venezuela; management said Pikka 1 is ramping, Pikka 2 could be decided in 2027, Quokka and Horseshoe add upside, and Venezuelan cargo payments are funding current gas and oil investment needs.