Eni Profits Rise on Libya, Ramp-Ups, Prices
Eni profits surged in the second quarter, as prices firmed and its production grew by 5% year on year, the Italian major reported July 27. Net profit increased to €1.25bn ($1.47bn), up from €18mn in 2Q2017.
“The Gas & Power segment reported excellent results, thanks to the strong integration of the LNG business with upstream activities and the positive impact of the restructuring carried out over the last years,” remarked CEO Claudio Descalzi, also noting Eni’s finalisation last week of terms for its 2018/19 gas offtake under its long-term contract with Algerian state Sonatrach. He gave few other details.
Adjusted operating profit, which Eni uses to measure ongoing business performance, was up 152% year on year to €2.56bn. Of that, E&P’s share increased by 225% to €2.74bn while G&P grew by 74% to €108mn. Refining earnings declined, while there were negative corporate items.
Production increased by 5% to 1.86mn barrels of oil equivalent/day (boe/d) in 2Q – of which 53% was gas- driven by ramp-up of recent giant projects including Zohr and Noroos in Egypt and Jangkrik in Indonesia (all three gas), OCTP (oil and later gas offshore Ghana) and Kashagan in Kazakhstan. Among start-ups in 2Q was phase 2 of the giant Bahr Essalam gas field offshore Libya, just three years after its final investment decision (FID).
Zohr’s fourth gas treatment unit started up in record time, taking installed capacity to 1.6bn ft3/d, and its operator and 50% owner now expects the fifth unit to start up in September, giving a total capacity of 2bn ft³/d.
Production in 2Q split out as 5.36bn ft3/d gas (up 4%) and 881,000 b/d liquids (up 6.5%). A 49% rise in dated Brent’s price to $74.35/b in 2Q also helped earnings.
Eni expects capex of €7.7bn in full year 2018, in line with its guidance. Descalzi also said Eni's net debt had been reduced to below €10bn for the first time since 2006.
The company also reported significant progress made this July in its portfolio management with the creation of Var Energi in Norway as well as funds received from the sale of Eni’s 10% stake in the giant Zohr field to Abu Dhabi state-owned Mubadala, he added.
Strong results from LNG
Bolstering its G&P earnings, Eni said first half 2018 LNG sales were up 54% year on year at 5.4bn m3, more than half of which were sold in Asia, leveraging its increased equity gas supply in Indonesia (Jangkrik). It expects an increase in nearly 9mn mt of LNG contracted volumes by end-2018.
Gas & Power benefited from a 28% rise in the Italian PSV gas hub price and a 35.5% rise in the Dutch TTF gas price year on year in 2Q; Eni is Italy and Belgium’s main gas marketer.
Following submission by the ExxonMobil-led consortium of the Rovuma LNG development plan to the Mozambican government, partner Eni said July 27 it expects FID on that project in 2019. Eni is operator of the separate Coral South floating LNG venture (also using Area 4 gas) due to start 2022.