Eni sees red as low oil prices bite

Italian oil company Eni on Friday posted a fourth-quarter loss and reported that the company’s oil and gas output rose to its highest level in the last five years. 

Eni on Friday posted a net loss of €8.46 billion ($9.3B) in 4Q 2015, compared to a €2.4 billion ($2.6B) loss in the year-before quarter.

The company’s hydrocarbon production was up 14% to 1.88 million boe/d in 4Q 2015, the highest level in 5 years.

Eni’s exploration activities in the year added 1.4 bboe of fresh resources, versus an initial guidance of 0.5 bboe, at an average cost of 0.7 $/barrel, also boosted by the giant Zohr discovery offshore Egypt.

According to the oil company, after hitting multi-year lows of below $30 per barrel, the price of crude oil is expected to continue to be weak due to structural imbalances in the marketplace driven by oversupply and renewed uncertainties surrounding the pace of future energy demand in the medium and long term.

Based on this macroeconomic outlook, Eni’s management has revised downwards its pricing assumptions of the Brent crude oil marker utilized in each of the periods of the company’s strategic plan 2016-2019: particularly the long-term reference price has been reduced to 65 dollar-a-barrel, down from the 90-dollar case utilized in the previous planning assumptions.

In order to cope with the anticipated negative impact of the scenario on the E&P results from operations and cash flow, Eni’s management is planning to increase efforts to optimize capex and reduce operating costs by exploiting the deflationary pressure induced by the fall in crude oil prices.

Offshore Energy Today Staff

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