Galp’s quarterly profit up 16% and Namibia oil in focus

By Sergio Goncalves

LISBON (Reuters) -Portugal’s Galp Energia reported on Monday a 16% rise in second-quarter net profit, beating expectations as higher oil prices and lower production costs offset reduced output and the refining margin held steady.

The company also confirmed ongoing preparations for a second drilling phase of four wells in Namibia’s Mopane field, where it has an 80% stake, starting in the fourth quarter. It said it was in preliminary talks with possible partners.

Galp shares, up more than 40% so far this year, rose more than 1%.

It booked an adjusted net profit of 299 million euros ($325.34 million), above the 236 million euros expected by 18 analysts polled by the company.

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 7% to 849 million euros, compared with the 821-million consensus.

Galp has estimated Mopane could contain at least 10 billion barrels of oil, making it one of the largest discoveries in the nascent basin following successful exploration by TotalEnergies and Shell.

Reuters reported earlier that more than 12 oil companies, including Exxon, Shell and Brazil’s Petrobras, had expressed interest in buying a 40% stake in Mopane.

We’re having preliminary discussions with potential partners, but you will understand there is nothing much we can say at this stage,” Chief Executive Filipe Silva told a conference call with analysts.

He said Galp would give priority to a partner keen to develop quickly and that would provide the capital expenditure.

The timing of any farmout agreement would depend on the development needs and on when Galp can get the most for the stake, he added.

After completing the sale of assets in Angola and agreeing to sell those in Mozambique, Galp has unprecedented financial strength and can keep delivering long-term growth from “high return projects,” he said.

Galp maintained its guidance for average annual net capex of 1 billion euros over 2023-25.

Galp’s share of oil and gas production from upstream projects in Brazil fell 5% on the year to 106,000 barrels of oil equivalent per day (boepd). It did not book production in Mozambique in the quarter after booking 5,000 boepd a year ago.

($1 = 0.9190 euros)

(Reporting by Sergio Goncalves; editing by Andrei Khalip and Barbara Lewis)