Portugal's Galp Sells Angolan Oil Assets

Portuguese oil company Galp Energia posted record full-year profit on Monday thanks to higher oil prices and refining margins, with the favourable market conditions also facilitating the sale of its upstream business in Angola.

Galp said it had agreed a deal to sell its exploration and production assets in Angola to SOMOIL for about $830 million.

The company's Angolan output comes from mature fields with declining production while its main upstream business is in Brazil, where it also runs renewable energy plants.

"This transaction allows Galp to crystallize value from mature upstream assets," new Chief Executive Filipe Silva said in a statement, adding that it also supports the company's decarbonisation strategy.

RBC analysts said in a research note that "on first look, the valuation received (for the Angolan assets) looks attractive."

Galp's adjusted 2022 net profit of 881 million euros ($940.3 million) surpassed the previous record of 707 million euros in 2018. The adjustment reflects changes in the company's crude oil stocks.

Fourth-quarter adjusted net profit more than doubled to a better than expected 273 million euros, helped by a refining margin that rose to $13.50 a barrel from $5.50 a year earlier.

Adjusted core profit, meanwhile rose 48% to 951 million euros in the fourth quarter, in line with forecasts, but the company warned that 2023 core profit is expected to fall to 3.2 billion euros from last year's 3.85 billion euros on projections for lower oil prices and refining margins.

"2023 outlook looks weaker and medium-term production guidance also lighter than expected," RBC analysts said.

Galp's shares opened 1.6% higher on Monday but then turned negative to trade 0.7% down at 12.24 euros.

(Reporting by Sergio Goncalves; Editing by Subhranshu Sahu and David Goodman)