Eni narrows quarterly loss but output takes a hit
Italian oil and gas company Eni managed to cut its losses in the fourth quarter of 2020 as its production dropped by 11 per cent year-over-year.
Eni said in its report on Friday that the net loss in 4Q 2020 amounted to €725 million ($876M) compared to a loss of €1.89 billion ($2.28B) in the fourth quarter period of 2019.
The company’s adjusted profit was €66 million, an 88 per cent decrease compared to €546 million adjusted profit in the corresponding period of 2019.
For the full year 2020, Eni booked a loss of €8.6 billion, compared to a profit of €148 million in 2019.
Eni CEO, Claudio Descalzi, said: “In a year like no other in the history of the energy industry, Eni has proven the robustness and flexibility of its business model by reacting swiftly and effectively to the extraordinary crisis context, while progressing the company’s irreversible path for the energy transition.
“In the space of a few months after the outbreak of the pandemic we reduced capital spending and limited the impact of the sharp drop in crude oil prices on the cash flow, strengthening our liquidity and preserving the robustness of our balance sheet. The fourth-quarter operating profit and net profit outperformed estimates, achieved through a 44 $/barrel oil price, underpinned by our operating cash generation and the effectiveness of our response to the crisis”.
Eni 4Q output down
Eni’s hydrocarbon production was 1.71 million boe/d in the fourth quarter of 2020, which is down by 11 per cent compared to the same period of 2019 and production of 1.92 million boe/d.
Net of price effects, the decline was due to COVID-19 impacts, related OPEC+ production cuts and lower gas demand, mainly in Egypt, according to Eni.
Production start-ups/ramp-ups, the better contribution of Kazakhstan and portfolio contributions in Norway were partly offset by lower volumes in Libya driven by an expected contractual trigger, lower entitlements/spending and losses due to force majeure, as well as mature field declines.
Eni’s adjusted operating profit in the E&P part of the business continued rebounding in the fourth quarter at €0.8 billion, up by approximately 60 per cent compared to the third quarter.
The comparison against the previous year reporting periods (down by 61 per cent and 82 per cent in the quarter and in the full year, respectively) was negatively and significantly affected by a 2020 depressed scenario for hydrocarbon prices and by lower production due to anti-COVID actions and the sharp drop in energy demand.
Hydrocarbon production for the FY 2020 was 1.73 mmboe/d, in line with the company’s guidance updated following the pandemic.
Global Gas & LNG Portfolio’s adjusted operating result was a loss of €0.1 billion in the fourth quarter, worse than the same period in 2019, due to an unfavourable trading environment.
In the fourth quarter of 2020, natural gas sales of 18.57 bcm increased by 9 per cent compared to the same period of 2019, due to the higher long-term gas volumes marketed outside Italy, mainly in Turkey, as well as higher LNG gas sales, which were increased by 7 per cent.