US institutional investor EIG, which specialises in the infrastructure and energy sectors, has reached an agreement with Repsol to acquire 25% of its upstream oil and gas business, which includes its exploration and production activities worldwide. Repsol Upstream was recently created to encompass these activities as part of the Spanish company's strategy to divest upstream assets and reinvest in renewable energy in order to reduce its carbon footprint and pursue its goal of achieving net zero emissions by 2050.

The deal means that Breakwater Energy, a newly created subsidiary of EIG, will pay approximately $4.8 billion (€4.8 billion) for 25% of Repsol Upstream, including debt. This price tag values the company at around $19 billion. Repsol will retain the remaining 75%, thus maintaining control of the company and consolidating its results in the group's accounts. The capital from the sale will be reinvested in the firm’s renewable energy generation, renewable fuels and circular products segments.

Energy transition
Repsol's 2020-2025 strategic plan essentially focuses on the company's energy transition, without renouncing growth, profitability, financial strength or a shareholder remuneration that it wants to maintain as one of  the best in the industry andamong the Ibex 35 companies. One of the plan's specific objectives is to bring in partners who will accelerate progress towards its goal of achieving net zero emissions, currently set for 2050.

The entire workforce and current management team will remain with the company. Repsol will be able to appoint four board members, and EIG will be able to elect two; the other two will be independent. The investor company may also appoint two senior executives, one to the position of ESG Director, and the other to lead special projects, which include a possible stock launch.

Diversified portfolio
Repsol Upstream expects to produce around 590,000 barrels of oil per day in the second half of 2022. Its proven reserves as of 31 December last year stood at 2.3 billion barrels, 70% of which were gas. It is a diversified portfolio that will now draw on EIG's experience in markets like the US, the North Sea, Brazil and Asia Pacific. Based on these data, and subject to favourable market conditions, Repsol Upstream’s shareholders have agreed to the possibility of listing a minority stake in the US market from 2026.

EIG President and CEO, R. Blair Thomas, calls the deal “a compelling opportunity to lead change in our industry”, and explained, "This business is well positioned to help meet the growing global demand for affordable, efficient and secure energy, and so contribute to meeting the twin goals of decarbonisation and reliability that the world is striving to achieve”.

Repsol CEO, Josu Jon Imaz, said in turn, "Our ambition is to lead the energy transition. This pioneering agreement allows us to maintain the strategic direction of the upstream unit and, at the same time, to boost the transformation of the company and its multi-energy profile to achieve net zero emissions by 2050”.

^{Photo: Repsol}