Galp Energia SGPS (GALP) Q2 2024 (Q&A) earnings summary

Executive summary

• Q2 2024 delivered strong operational and financial performance, with upstream production at 106 kboepd and EBITDA RCA of €849m, supported by portfolio rotation and disciplined capital allocation.

• Asset rotation advanced with completion of the Angolan farm-down and announced divestment from Area 4 in Mozambique, generating significant proceeds and strengthening the balance sheet.

• Preparations underway for a major exploration campaign in Namibia, with flexibility in partnership timing and recent discoveries of significant light oil columns.

• 1H24 saw continued strong operating results, with RCA Ebitda of €1,788m and OCF of €1,205m, excluding Mozambique Coral South FLNG.

Financial highlights

• 2Q24 RCA Ebitda reached €849m, OCF was €646m, and net income was €299m, with FCF at €789m including Angola divestment proceeds.

• Net debt reduced to €1.2bn, with net debt to RCA EBITDA at 0.35x as of June 30, 2024.

• Cash tax guidance for the full year maintained at €1–1.1 billion, with a tax rate around 46%.

• OCF and EBITDA guidance improved due to better-than-expected business performance, despite Mozambique deconsolidation.

• Cash and equivalents stood at €2,351m, with undrawn credit facilities of €1,660m.

Outlook and guidance

• FY24 guidance revised: RCA Ebitda now expected to exceed €3.1bn, OCF over €2.0bn, and net capex around €1.0bn.

• Net CapEx guidance remains unchanged, with flexibility to adjust as asset sales and exploration progress.

• Production costs expected to decrease to $2–$3 per barrel, with DD&A per barrel also declining.

• Dividend per share increased by 4%, with a €0.56/share proposal for FY24 and €0.28/share interim to be paid in August.

• Long-term net zero target by 2050 reaffirmed, but interim decarbonization guidance suspended due to slower-than-expected renewables growth.