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TAKING THE PULSE: Collapsing oil prices likely took their toll on European oil and gas companies in the fourth quarter.

However, analysts expect Total SA (TOT) to notch up one of the lowest earnings declines of the wider European oil and gas sector, helped by its relatively low costs and support from European refining.

By contrast, Repsol SA (REP) is expected to report one of the steepest falls in profit as a strong downstream performance was unable to compensate for a decline in output and weaker results at its YPF unit.

Oil prices plunged by $33 per barrel to about $57 a barrel in the fourth quarter from a year earlier, J.P. Morgan says.

Most industry observers expect oil prices to recover in the medium term, but depending on how much longer low prices persist, focus is on possible cuts in planned investments and dividends at some companies.

COMPANIES TO WATCH:

--- Total SA (TOT)(4Q/FY 2008 earnings) (Feb. 12) ---

MARKET EXPECTATIONS: SocGen expects the company to demonstrate "the best resilience to the weaker economic climate of the European oil majors." Dresdner Kleinwort said upstream production figures will be poor but expects Total to post a solid result.

MAIN FOCUS: Total said it expects higher oil prices will return, so its capital expenditure plans for next year will be one key focus. Merrill Lynch sees the company keeping 2009 capex broadly flat in dollar terms. JP Morgan highlights another focus - which projects the company will go ahead with in 2009 given current oil prices. Analysts see Total as one of the majors most readily able to maintain its dividend amid weak oil prices.

--- Eni SpA (E) (4Q 2008 - Feb. 13) ---

MARKET EXPECTATIONS: Fourth-quarter net profit and operating profit are expected to drop more than 15% annually as weaker crude prices take their toll on earnings.

An estimated oil and natural gas production increase for 2008 - seen at a modest 1% to 2% range on the year - as a result of the company's acquisition spree won't be sufficient to offset the slide in crude prices, said analysts.

Eni's important Gas and Power division is also expected to be hit by lower electricity consumption and from industries as the Italian economy slipped into a recession.

MAIN FOCUS: Market players are keen to see details of the 2009-2012 growth plan, with special emphasis on the new capital expenditure in a lower oil price environment, and new production targets.

Observers will be watching out for comments on acquisition opportunities, the growth strategy for the Gas and Power division and the effects of output reductions in OPEC countries.

--- Repsol SA (REP) (4Q/ FY 2008 earnings - Feb. 26) ---

MARKET EXPECTATION: Adjusted fourth-quarter profit is seen falling 29% to EUR464.6 million, according to the average estimate of seven analysts polled by Dow Jones Newswires. Adjusted net profit includes inventories, but excludes minority interests and one-off items.

Repsol earnings are expected to be hard hit by the oil price decline due to an export tax in Argentina that kicks in once the WTI price falls below a certain level.

Production is also expected to be lower, due to a natural decline in Argentina, and a contract revision in Libya. Refining margins, in particular in Iberia, are likely to be robust, but demand likely declined.

MAIN FOCUS: A slowdown in demand, in particular in Spain and Argentina, could hit Repsol more than other oil companies, due to the great importance of refining in its results. Together with the impact of lower oil prices, that could force the company to review some of its investment plans.

On the upside, consortia including Repsol may produce further positive - and possibly giant - exploration news from Brazil. The likely need for a massive amount of funding to develop fields there could, however, put strains on company finances.

Industry observers will also closely watch whether Spain's Sacyr-Vallehermoso SA (SYV.MC) will soon succeed in selling its 20% stake in Repsol after attempts to sell it to Lukoil of Sinopec so far seem to have failed.

--- Gas Natural SPGS SA (GAS.MC) (4Q/ FY 2008 earnings - Feb. 10) ---

MARKET EXPECTATION: Fourth-quarter profit is anticipated to rise 20% to EUR279.6 million, according to the average estimate by four analysts polled by Dow Jones Newswires.

Profit is expected to be pushed up by higher Spanish electricity pool prices, and a rise in electricity output in Spain and Latin America.

Gas distribution and supply is expected to rise far less rapidly. Analysts will closely watch margins in the gas business, which still accounts for the bigger part of company earnings.

MAIN FOCUS: With the planned purchase of Union Fenosa SA (UNF.MC), Gas Natural will increasingly become an integrated natural gas and electricity utility.

Also, "adding Union Fenosa's gas assets, Gas Natural would become one of Europe's major natural gas suppliers," says Bankinter analyst David Garcia Moral, but adds "there are still uncertainties about whether Gas Natural will be allowed to keep Union Fenosa Gas."

In particular, Union Fenosa's lucrative LNG assets in Egypt are seen as valuable. However, Eni, which currently owns 50% of Union Fenosa Gas, already has made clear that it would like to acquire the other 50%.

-By Bernd Radowitz, Dow Jones Newswires; +34-395-8125; bernd.radowitz@dowjones.com;

(Adam Mitchell in Paris and Liam Moloney in Rome contributed to this report.)

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