After five quarters affected by the downturn in oil prices, the Italian oil company Eni returned to profit in the fourth quarter 2016, owing to higher oil prices and spending cuts.
The Italian company’s net profit for the fourth quarter of 2016 was 340 million euros ($358.1M) compared to a net loss of 8.45 billion euros ($8.9M) in the same period of 2015.
In the fourth quarter of 2016, Eni reported an adjusted operating profit of €1.29 billion, up by 103% or €0.65 billion quarter-on-quarter, reversing the negative trend of the previous quarters, thanks to doubling in the E&P operating performance to €1.4 billion (up by €0.8 billion).
According to the company, the E&P improvement was driven mainly by efficiency and optimization measures (up by €0.7 billion) and by a marginal recovery in the oil scenario (the Brent benchmark was up by 13.2%), which has yet to be fully reflected in gas prices which were down due to the time lags in oil-linked price formulas. These increases were partly offset by lower non-recurring gains in the G&P segment.
Further, in the fourth quarter of 2016, Eni reported an adjusted net profit of €459 million after five quarters affected by the oil price downturn. Compared to the fourth quarter of 2015 when an adjusted net loss of €301 million was recorded on a standalone basis, the €760 million improvement reflected a better operating performance and a significantly reduced tax rate, which declined to 58% from 168% quarter-on-quarter.
In the fourth quarter of 2016, Eni’s hydrocarbon production was 1.856 million boe/d (1.759 million boe/d in the full year), 1.5% lower compared to the fourth quarter of 2015 (unchanged y-o-y).
Claudio Descalzi, Eni’s Chief Executive Officer, commented: “The 2016 results mark the successful conclusion of a radical transformation process. Over the past three years, Eni has restructured to withstand one of the most complex environments in the history of the oil industry, while strengthening its growth prospects and preserving a robust balance sheet.
“Our future growth trajectory will leverage on the key achievements made in this period: a strong production in Q4 of 1.86 million boe/d, our record proved reserve replacement ratio, a well-stocked pipeline of new, high quality projects which will contribute to an expected production growth rate of 3% on average in the next four-year period, and the advanced restructuring of our mid-downstream businesses.”