Eni back to black in third quarter

Italian oil company Eni returned to profit in the third quarter of this year thanks to recovery in oil prices and increase in production. 

In the third quarter of 2017 the Italian oil company recorded a profit of €344 million compared to a loss of €562 million in the prior-year quarter.

According to Eni’s financial report for the 3Q 2017 on Friday, the E&P segment reported an increase in operating profit of €0.4 billion due to an ongoing recovery in crude oil prices, the Brent benchmark was up by 14%, and production growth.

The G&P segment strengthened its performance (up €0.18 billion or by 48%) in a seasonally weak quarter, due to the positive effects of the re-negotiations of long-term supply contracts and other optimizations.

Eni’s revenues rose to €15.78 billion during the third quarter 2017 from €13.3 billion in the same period of 2016.

Commenting on the results, Eni CEO Claudio Descalzi, remarked: “In the third quarter, we achieved excellent results with an increase in operating profit almost four times higher, a net result above €700 million and net growth in operating cash flow compared to the third quarter of 2016. Investments followed trends in line with expectations, with a reduction of approximately 18% during the year compared with 2016.

“In 2017 we expect to achieve organic coverage of investments and dividends, entirely paid in cash, at a Brent price of 60$ a barrel as planned, or 45$ a barrel when taking into account our dual exploration model initiatives.”

Descalzi also added: “In the Upstream sector, hydrocarbon production grew by 7%, net of the cuts imposed by OPEC and the price effect.”

As detailed in the report, the Italian company produced an average of 1.8 million boe/d in the third quarter, up by 5.4%; excluding price effects at PSAs and OPEC cuts, up by 7%.

Production is expected to ramp up further in the fourth quarter, reaching approximately 1.9 million boe/d on average in the period, the highest level in seven years, with the contribution of high valuable barrels.

In the nine months of 2017, Eni’s capex amounted to €7 billion. Spending has reduced in the third quarter after a peak registered in the first half of 2017 due to the completion of certain large projects. Eni confirmed the target of reducing capex by approximately 18% y-o-y at constant exchange rates.

Eni’s net debt at the end of the quarter was €14.96 billion but it is expected to decrease y-o-y following the closing of disposals.

The company expects an average FY production of 1.815 million boe/d, matching the all-time high in 2010, a 5% increase from 2016 excluding price effects at PSAs and OPEC cuts. This will be driven by new project start-ups (Indonesia, Angola and Ghana), ramp-ups of fields entered into operation in 2016, mainly in Kazakhstan, Egypt and Norway, as well as the restart of certain Libyan fields.

Contingent factors such as the shutdown of the Val d’Agri oil centre, which was down for almost the entire second quarter, the impact of OPEC cuts, as well as certain contractual one-offs recorded in 2016, will be absorbed by the implementation of other initiatives to optimize production, as well as by the earlier than planned start-up of the large projects in Angola, Indonesia and Ghana.

Offshore Energy Today Staff

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