Rebsol share price adjusted after dividend reduction

The Repsol S.A. shares (ETR: REP) moved lower at the end of last week after the energy giant said it plans to reduce payouts to shareholders and sell a stake in its lower-carbon unit, slowing the company’s oil and gas production.

Fundamental analysis: Dividend payouts cut

Repsol said it plans to reduce its operating expenses for oil and gas exploration and production by 15%. It is one of the first fuel companies to commit to reducing all emissions from its products.

The Spanish fossil fuel company will reduce its shareholder payouts for 2021 and 2022 from 1 euro per share to 0.60 euro per share in cash. Repsol said that the buybacks could increase returns to more than 1 euro per share by 2025 and added that it will no longer offer the free dividend.

Repsol’s competitors Royal Dutch Shell and British Petrol also reduced their dividends this year, before Shell increased its payouts again in October.

The company said 30 percent of the $22.1 billion investment will go to Repsol’s lower-carbon businesses, including renewable energy and biofuels companies, which will lead to a five-fold increase in renewable generation capacity to 15 gigawatts (GW) in 2030.

Repsol’s CEO, Josu Jon Imaz, said he plans to sell a stake in the new low-carbon business to one of the partners or publicly offer the unit’s shares over the next two years.

“There is no strictly timed calendar, but in 2021, 2022 we will carry out this operation,” Imaz said during a press conference.

Technical analysis: stocks correct lower

Repsol’s shares fell by almost 4% on Thursday, just one day after printing a 5-month high at 8.98 euros. The stock has fallen by 38% since the beginning of the year as the fuel sector suffered a severe blow following the outbreak of the coronavirus.

Daily chart of the Repsol share (TradingView)

The Repsol share price still closed almost 10% higher last week as risk appetite recovered. The bulls are now working to push the price action above the 9.00 mark, which offers near resistance.

Summary

Repsol, the Spanish fossil fuel company, intends to reduce the payouts to shareholders for 2021 and 2022 from 1 euro per share to 0.60 euro per share. The company also plans to sell a stake in its lower carbon company as it reduces its oil and gas production.