Eni Ramps up Output, Suffers from Prices

Italian oil and gas major Eni saw adjusted net profits tumble 44% yr/yr in the third quarter to €776mn ($863mn), it said on October 25.

Bearish market conditions took their toll on Eni’s earnings, as did the loss of revenues from its former Norwegian unit Eni Norge, following its merger last year with Point Resources, creating Var Energi.

The weaker performance came despite a 6% quarter-on-quarter growth in Eni’s oil and gas production to 1.89mn barrels of oil equivalent/day – its highest ever third-quarter result. Output is expected to ramp up further in the fourth quarter, driven by growth at the Zohr gas field off Egypt.

Eni expects to add 250,000 boe/day of new production this year, as a result of Zohr, fields launched last year in Libya, Ghana and Angola reaching full capacity and new start-ups this year, namely the Area 1 oil project offshore Mexico, Baltim SW in Egypt, North Berkine in Algeria and the Trestakk field in Norway. Through Var Energi, Eni is set to expand its control of the latter project by acquiring the Norwegian business of ExxonMobil.

Cash flow before working capital at replacement cost slumped 23% yr/yr to €2.6bn, but were up 5% yr/yr at €9.4bn, enabling Eni to cover its €5.6bn in net investments in the period and its planned dividend and buy-back for the full year, projected at €3.4bn.

“This shows that Eni’s efficient portfolio can achieve breakeven at prices well below current difficult conditions,” CEO Claudio Descalzi said. Eni expects capital expenditure for 2019 at slight below its previous forecast of €8bn.