Eni Triples 3Q Profit, G&P Breaks Even
Eni's net profit in 3Q 2018 powered to €1.529bn ($1.74bn), almost four and a half times 3Q 2017's €344mn – largely realised upstream.
A 45%-higher oil price was a key factor, as production year on year in 3Q 2018 was flat at 1.803mn barrels of oil equivalent/day, of which 51% gas and 49% liquids. “All the businesses have performed well, with the Upstream division showing that it can thrive both in an environment of increasing oil prices when compared with 3Q 2017 and, above all, in an environment of flat oil prices when compared with 2Q 2018,” said CEO Claudio Descalzi.
Net debt was reduced by €900mn from June to €9bn at end-September, and was 40% below end-September 2017.
Eni noted its 3Q ramp-up of production at its “highly-profitable giant projects” – Zohr and Noroos gas in Egypt, Jangkrik gas in Indonesia, OCTP in Ghana, and Nene phase in Congo (both oil) – plus start-ups of OCTP gas phase, Libya’s phase 2 Bahr Essalam gas and Ochigufu in Angola – all offshore. It also increased production at the giant Kashagan field in Kazakhstan and entered Abu Dhabi. In Libya, it signed an agreement with the state NOC and BP to resume exploration activity.
In Gas & Power, Eni made a small €30mn operating profit in 3Q (compared to its year-ago €139mn loss) that was underpinned by trading from Eni’s LNG and gas portfolio. Worldwide gas sales of 17.44bn m3 in 3Q were flat year on year, but included LNG sales up 4% at 2.5bn m3 (typically higher margin) offset by the termination of some (lower margin) long-term contracts in Germany and Austria due to “portfolio rationalisation”. The average Italian PSV hub price in 3Q was up 46% year on year at €280/’000 m3, while Dutch TTF was up 52% at €260/’000m3.
During January-September 2018, adjusted G&P operating profit was €0.5bn, while its LNG sales increased by 34% to 7.9bn m3, more than half of which was sold on the Asian markets – leveraging on supplies of upstream equity gas in Indonesia, as result of the improved integration across its upstream and G&P businesses.
Adjusted 3Q profits from refining & marketing were 76% lower year on year at €57mn.
Group results included impairments of €125mn upstream, relating to the merger of Eni’s Norway merger with Point Resources, and €50mn in downstream gas including in Hungary. It also reversed prior-period impairments at its Angola LNG joint venture.