Italian Eni Reports Q2 Growth, Sets Up Advisory Board
Italian Eni announced it has set up an advisory board, as it reported July 28 an adjusted operating profit of €1.019bn ($1.19bn) in the second quarter of this year, compared with €188mn in the same period of last year.
Upstream accounted for €845mn of that – over five times more than in the same period last year – and refining, marketing and chemicals more than doubled, to $352mn. Production was up 3.3% to 1.77mn barrels of oil equivalent/day, and the Brent crude price was also up by about 9% over the period, year on year. Gas production of 5.152bn ft³/d rose 10% and liquids fell 3%, leaving gas accounting for just over half the total.
Eni's Gas and Power division made a loss of €146mn, down by about a third on 2Q 2016 but it did better over the first half as a whole, with profits up more than three times the 2016 period at €192mn, and better than the company said it expected. It has sold its Belgian business to Dutch utility Eneco for an undisclosed sum. Announced in March, the deal closed earlier this month.
Sales in Italy were up by 10.1% to 9.50bn m³ due to recovery in demand and the acquisition of new sale contracts. Sales in the European markets (7.34bn m³) fell by 23.2% reflecting lower sales in Germany, Benelux and France as well as lower volumes sold in Hungary following the disposal of customers in 2016, partly balanced by higher volumes sold in Turkey, higher sales to Botas and in the UK, it said.
Eni credited the better result to "positive effects of renegotiations of purchase long-term contracts, including some contract terminations. These positives were partly offset by lower non-recurring gains relating to the renegotiations defined in 2016 with retroactive benefit."
CEO Claudio Descalzi said: "These achievements have enabled us to generate around €5bn of organic cash, with a free cash flow of €700mn, despite the volatile environment. Therefore, we are able to confirm our goal of funding capital investments and the dividend from organic sources."
Eni discovered 500mn barrels of new resources in the first half. Total production also grew by 192,000 barrels of oil equivalent or over 6% year‐on‐year, continuing the upward trend seen in recent months, with more to come when Zohr, the giant field offshore Egypt, comes on line by the end of this year.
Eni said it confirmed the 2017 target of 800mn boe of new resources, at a unitary discovery cost of about $1/b, and confirmed full year production target of 1.84mn boe/d, an increase of 5% from 2016.
It said it would leverage new project start-ups in Indonesia, Angola and Ghana and ramp-ups of fields entered into operations in 2016, mainly in Kazakhstan, Egypt and Norway. This would help offset impacts from the "unexpected shutdown of Val d’Agri" and Opec cuts.
Advisory board set up
Eni has also set up a four-strong advisory board, reflecting the diverse range of political, corporate and global concerns facing energy companies in 2017. The members are: the president and founder of the Eurasia Group think tank, which focuses on geopolitical issues, Ian Bremmer; Christiana Figueres, who was the executive secretary of the UN's Climate Change Committee from 2010 to 2016 and the main promoter of the Paris climate agreement; mergers and acquisitions expert Philip Lambert, founder of Lambert Energy Advisory; and Davide Tabarelli, the founder of Nomisma Energia, an Italian research firm on energy issues.
William Powell