Eni records slight dip in net profit. Production rises

Italian oil company Eni reported a slight drop in its first-quarter profit of 2018, compared to the first quarter of 2017.

The company’s first-quarter profit was 946 million euros, two percent down from 965 million euros realized in the first quarter a year ago. Worth noting, 1Q 2017 included a gain recorded on the divestment of a 10% interest in the Zohr gas field amounting to €339 million.

Eni’s adjusted net profit in 1Q 2018 was 978 million euros, a 31 percent increase compared to 744 million euros in the first quarter a year ago.

Oil and gas production was at 1.87 million boe/d, rising four percent compared to the corresponding quarter a year ago.

The increase was spurred by the ramp-up at fields started up in 2017, mainly in Angola, Egypt, Ghana and Indonesia and the 2018 start-ups (with an overall contribution of 238 kboe/d), as well as the acquisition of the two Concession Agreements of Lower Zakum (5%) and Umm Shaif/Nasr (10%) producing off the United Arab Emirates.

Full year production to rise 4 %

Looking ahead, Eni has raised its initial growth forecast and now expects a 4% increase in production for the full year 2018, compared to 2017, equal to a production level of about 1.9 million boe/d.

Eni said the expected production growth would be driven by continuing production ramp-up of fields started up in 2017, particularly in Egypt, Indonesia and at the Kashagan field, new fields start-ups in Angola and Ghana, the plateau achievement at Goliat offshore Norway), as well as the contribution of the new venture in UAE. However, Eni said, these increases are expected to be partly offset principally by mature field declines.

Commenting on the results, Claudio Descalzi, CEO of Eni, said: “In the first quarter of 2018, Eni achieved excellent economic and financial results, over and above the rising price of oil. As the Brent price in euros rose 8% relative to the first quarter of 2017, Eni’s adjusted operating profit increased by 30%, while operational cash generation at replacement cost grew by 22%. These results were achieved primarily because of an increase in our hydrocarbon production, which produced a 47% increase in adjusted operating profit from E&P.

“In addition, the first quarter saw the continuation of the optimization of our asset portfolio with our entry into the United Arab Emirates, one of the most productive areas in the world, and the sale of a further 10% of the Zohr field in Egypt.

“The Mid‐Downstream businesses also achieved important results in the quarter, despite a less favorable scenario compared to 2017. The divisions benefitted from the strengthening and development measures we have implemented over the past three years. In particular, LNG achieved significant results due to increased integration with other Group activities. On the basis of these results and the strategy announced in the 2018‐2021 plan, I confirm the objective of cash neutrality for 2018 at a Brent price of $55 per barrel,” he said.

The company’s full-year 2018 capex is expected o be €7.7 billion.