Eni's Gas & Power Surges
Italy’s Eni had a strong year, it said February 15, with record hydrocarbon production, reserves replacement at 131% on a three-year average and the strongest profit from the gas and power division since the pipeline assets were demerged. It also gained from LNG and from long-term gas contract renegotiations. It did not name the counterparts but it has been in negotiations for some years with Dutch GasTerra, with which it has take or pay commitments.
It reported Q4 adjusted operating profit of €2.99bn ($3,37bn), up 49% on Q4 2017, and full year operating profit of €11.24bn, which was almost twice the amount in 2017.
Adjusted Q4 net profit was €1.46bn, up 55% on Q4 2017 and €4.59bn in the full year, almost twice the amount in 2017. Net Q4 profit was €0.50bn and for the year it was €4.23bn.
Cash flow from its Q4 operations was €4.33bn, up by 32% on Q4 2017 and €13.65bn in 2018, up 35% on 2017. Net capex was €7.94bn for the year. Its debt to equity gearing is 16%, which is down from 23% at the end of 2017.
CEO Claudio Descalzi said the upstream division saw cash flow per barrel of $22.5, four years ahead of the target and it strengthened and geographically diversified its portfolio with the establishment of Var Energi in Norway and building of a significant presence in the Middle East, while keeping costs low and maintaining a high level of profitability.
Its exploration and production division earned €2.93bn in Q4, up 57% thanks partly to record production of 1.85mn barrels of oil equivalent (boe)/d, up 2.5% net of price effects; and in 2018 recorded the best result of the last four years, with an operating profit more than doubled to €10.85bn. Oil and gas prices were up too, but by a smaller percentage. This performance was recorded despite a decline in gas demand in certain countries.
Its gas and power division more than doubled the 2017 result and saw the best performance of the last eight years, thanks to the restructuring of long-term gas supply contracts, LNG growth and optimisations in the power business. It reported adjusted operating profit of €43mn in the fourth quarter.
LNG contracted volumes were up by 70% to 8.8mn metric tons in 2018, more than half sold on the Asian market leveraging on supplies of upstream equity gas in Indonesia, as result of the improved integration across the two businesses.