The Company

FinancesJanuary – September, 2009

ENAP produces profits for the third consecutive quarter

**The Company has accumulated profits of US$ 87 million in the first 9 months of 2009.

The consolidated net income of the ENAP group of companies for the first nine months of 2009, after income tax of 17% and foreign taxes, amounted to US$ 87 million, a figure that compares positively with the loss of US$ 238 million in the same period of the previous year. Net income after deducting the special tax of 40% (Law 2.398), was US$ 22 million, compared to a loss of US$ 191 million in the 2008 period.

These figures reaffirm the positive trend seen since the first quarter of 2009 and show a favorable recovery for the Company.
The gross margin for the first nine months of the year was US$ 209 million, compared to a negative margin of US$ 91 million in the same period of 2008. This improvement is mainly explained by a greater reduction in the cost of sales (54%), versus a reduction in sales of 51%, both strongly influenced by a fall in the international prices of both crude oil and refined products.

Administrative expenses in first nine months of 2009 were US$ 70 million, a reduction of 15% compared to US$ 82 million reported in 2008.

Financial expenses declined by 6% between September 2008 and the same period of 2009, from US$ 140 million to US$ 131 million respectively, mainly reflecting lower interest rates on ENAP’s borrowings and the company’s present excellent access to borrowing terms and conditions.

In the September 2009 period, there was an exchange gain of US$ 12 million, which compares with a loss of US$ 79 million in the same period of 2008.

Prices of crude and refined products

In the January-September 2009 period, the average West Texas Intermediate (WTI) international benchmark price was US$ 57.2 per barrel, thus falling by 49.6% compared to the January-September 2008 average (US$ 113.5 per barrel).
However, during the 2009 period, there was a predominantly rising trend in the WTI price. While the average for the first quarter was US$ 43.0 per barrel, it rose to US$ 59.5 per barrel in the second quarter and to US$ 68.2 per barrel in the third quarter.

Meanwhile, the prices on the US Gulf Coast, which serve as a benchmark for the principal refined products sold by ENAP, continued a downward trend compared to the first nine months of 2008. The average price for diesel was US$ 66.0 per barrel in the 2009 period, 52.3% lower than the average for the 2008 period (US$ 138.3 per barrel). In the case of gasoline, the average price was US$ 66.6 per barrel in the 2009 period, falling by 45.3% below the average for the period January-September 2008 (US$ 121.7 per barrel). The price of fuel oil No.6 averaged US$ 51.6 per barrel in January- September 2009, 38.1% below the average for the 2008 period (US$83.4 per barrel).

The rises in refined products seen in recent months have been accompanied by a sharp fall in refining margins on the US Gulf Coast, a key variable in the financial results of ENAP.

Assets, financial debt and EBITDA

ENAP’s total assets as of September 2009 showed a rise of 3%, from US$ 5,290 million at December 31, 2008 to US$ 5,434 million in September 2009. This increase is mainly explained by the greater value of stocks and an increase in property, plant and equipment, offsetting a reduction in trade receivables.

Total liabilities at September 2009 increased by US$ 76 million, 1.5% more than at December 2008. ENAP’s financial debt plus interest-bearing supplier credits declined by 2.3% from US$ 3,637 million at December 2008 to US$ 3,543 million at September 2009. 

This debt reduction was achieved despite an increase of approximately 50% in the international prices of crude and products in that period, showing an effective management of working capital by ENAP.

The EBITDA generated by ENAP in the first nine months of this year amounted to US$ 432.0 million, which compares positively with US$ 150.7 million of EBITDA in the 2008 period.