MADRID • Spanish oil major Repsol plans to sell €6.2 billion (S$9.8 billion) in assets and cut investments by as much as 38 per cent over the next five years to help it preserve dividends following a plunge in oil prices.

Asset sales will bolster earnings before interest, taxes, depreciation and amortisation, which are forecast to increase by 46 per cent to €7.9 billion over the five-year period, the company said yesterday in a regulatory filing.

Spain's biggest oil producer, in which Temasek Holdings acquired an additional 5 per cent treasury shares in 2013, promised to cover its costs and deliver returns at a break-even oil price of US$50 per barrel under a stress scenario, the company said.

Repsol's base outlook sees benchmark Brent crude rebounding to US$91.80 by 2020.

The group confirmed that it would cut its global workforce by 6 per cent over the next three years, the Financial Times newspaper reported. "We are presenting a plan with a clear vision, and measurable commitments," chief executive Josu Jon Imaz was quoted by FT.com as saying.

Repsol is the worst performing integrated oil company in the Stoxx Europe 600 Oil & Gas Index this year, amid concern over its US$13 billion (S$18 billion) acquisition of Talisman Energy in May.

Its decision to announce longer- term spending cuts and disposals comes in the wake of a fall in oil prices caused by a United States supply glut, weaker Chinese demand and Opec's decision not to reduce output, FT.com said.

Repsol shares rose as much as 3.8 per cent in Madrid trading and were 2.2 per cent higher at €12.43 as of 9.22am local time yesterday. That pared this year's decline to 20 per cent, Bloomberg said.

Repsol plans to reduce capital expenditure in its exploration and production division by 40 per cent by 2020. It announced more than US$1 billion in asset sales over the past month, and part of that will go towards meeting the target in its strategic plan.

"We are absolutely committed to maintaining the investment-grade credit rating," Mr Imaz said.

Repsol's dividend yield - the annual return divided by the share price - reached 5.7 per cent last year, second only to Eni's among 10 European oil firms, according to Barclays, which forecasts an increase to 6.2 per cent this year and next.

French oil company Total had, last month, also announced sharp reductions that would cut capital spending by 30 per cent to 40 per cent from a peak in 2013 when crude markets were booming, and pledged to preserve its dividend payouts to shareholders.