Eni: Mozambique Stake Sale Moves Net Profit Up
Eni the international oil and gas company, today announces its group results for the third quarter and nine months 2013.
Adjusted Net Profit
In the third quarter of 2013, adjusted net profit was €1.17 billion, down 29.4% when excluding Snam’s contribution to continuing operations in the third quarter of 2012. The decline was due to a reduced operating performance, lower income from interests in industrial joint ventures and an increase of approximately 10 percentage points in the Group adjusted tax rate. This rose to 63.4% due to a higher contribution to Group profit before income taxes from the Exploration & Production segment which is subject to a larger fiscal take than other Group’s businesses.
In the nine months of 2013, adjusted net profit was €3.13 billion, down 41% when excluding Snam’s contribution to continuing operations in the nine months of 2012. The Group adjusted tax rate increased by 11 percentage points.
In the third quarter of 2013, net profit amounted to €3.99 billion, up by €1.53 billion or 61.9% from the same quarter of 2012 driven by the recognition of the gain on the divestment of the 28.57% stake in Eni East Africa, which retains a 70% interest in Area 4 in Mozambique, to CNPC, amounting to €3 billion net of the related tax charges. This positive was partly offset by a decrease in operating performance and other changes.
In the nine months of 2013, net profit was €5.81 billion, down by 5.8%
Exploration & Production
In the third quarter of 2013, Eni’s liquids and gas production of 1,653 kboe/d declined by 3.8% from the third quarter of 2012, reflecting significant force majeure events in Nigeria and in Libya (down by approximately 50 kboe/d). New field start-ups and continuing production ramp-ups mainly in Russia, Algeria, Angola and Egypt, offset planned facility downtime, in particular in the North Sea, and mature field declines. In the nine months of 2013, hydrocarbon production declined by 3.1% from the nine months of 2012 due to the drivers described in the quarterly disclosure.
Paolo Scaroni, Chief Executive Officer, commented:
“In the third quarter of 2013, we achieved significant exploration successes, made excellent progress in our development activities with new field start-ups and monetized part of our interest in Mozambique. These operating successes strengthen our profitability outlook against the backdrop of a quarter that has not only been affected by difficult market conditions in the European markets of mid and downstream, but also by the extraordinary reductions of production in Nigeria and Libya, and by the appreciation of the euro. Considering that these trends are temporary and given the solidity of our businesses, we will start the buyback program.”
Eni said that the full-year production is expected to be lower compared to 2012 due to the impact of geopolitical factors, in particular in Nigeria and Libya. Major project start-ups, such as those in Kazakhstan, Algeria and Angola, and continuing production ramp-up at fields started in 2012, in particular in Egypt, will proceed but will not be sufficient to offset these force majeure events, mature field declines and the effect of 2012 asset disposals.
In 2013, management expects a capital budget broadly in line with 2012 (€12.76 billion in capital expenditure and €0.57 billion in financial investments in 2012, excluding Snam investments). In 2013, the company is focused on the development of hydrocarbon reserves in Sub-Saharan and North Africa, Norway, the United States, Iraq, Kazakhstan and Venezuela. Additionally, exploration projects in Sub-Saharan Africa, Norway, Egypt, the United States and new emerging areas, as well as optimization and selective growth initiatives in other sectors, the start-up of the Green Refinery works in Venice, and elastomers and bio-technologies in the Chemical sector. Assuming a Brent price of $108 a barrel on average for the full year 2013, the ratio of net borrowings to total equity – leverage – is projected to remain substantially in line with the level achieved at the end of 2012, due to cash flows from operations and portfolio management.
October 30, 2013