Eni Makes Loss, Despite Divestments
Eni reversed a net profit of $832mn in last year’s first quarter into a net $792mn loss in 1Q 2016.
This was despite 1Q proceeds from disposals totalling €805mn: from the sale of 12.5% of Eni’s interest in Saipem plus a stake in Italian gas network Snam. Eni’s standalone adjusted operating profit was €472mn, down 69%, which net of a high tax rate were just breakeven, it said April 29.
Operating profit from upstream was down 93% at €94mn, compared with €1.41bn in 1Q 2015. Eni’s upstream oil and gas production was 3.4% higher at 1.75mn barrels oil equivalent per day – which included 4.7bn ft3/d gas, up 3.1% - but lower prices took their toll.
CEO Claudio Descalzi drew comfort from latest 1Q landmarks: “We strengthened the foundations for future growth as we took the final investment decision [FID] for the development of the giant [Egyptian offshore] Zohr gas field, and obtained approval for the development plan of Coral from the Mozambican authorities, and achieved further exploration success.” Two weeks ago he said an FID on Coral was “practically certain... this year."
Eni’s Gas & Power operating profit was 55% lower at €83mn in 1Q 2016. Gas sales in Italy increased by 2.5% to 10.8bn m3, but those elsewhere were 12% lower at 13.3bn m3, so worldwide sales ended up 6% down at 24.1bn m3. But its power sales grew 12% to 9.45 TWh.
The company re-confirmed its “strategy to renegotiate long-term supply contracts in order to align the supply terms with market conditions, as well as boost profitability in its high-value businesses: LNG, gas retail and trading.”
Group capital expenditure was €2.42bn in 1Q2016, slightly below the year-before €2.65bn.
Mark Smedley