Eni’s 3Q output soars, but profit slumps

Italy’s Eni has reported a 66 percent drop in net profit, and a spike in production compared to the third quarter of 2018.

Eni CEO Claudio Descalzi; Source: Eni

The company’s net profit for the quarter was 523 million euros, down 66 percent from 1,5 billion euros in the third quarter of 2018. Adjusted net profit was 776 million euros, a 44 percent fall compared to 1,38 billion euros in the corresponding quarter of last year.

Explaining the profit drop, Eni cited lower oil and gas prices (Brent was down by 18% compared to 3Q 2018) and the prior year contribution from the former subsidiary Eni Norge which was merged with Point Resources to establish Vår Energi, leading to the de-recognition of Eni Norge.

While the profit fell, the company reported “strong” growth in its third-quarter oil and gas production, with 1.89 million boe/d produced. This was up by 6% compared to the previous year’s 3Q production.

Eni’s production performance was driven by the ramp-up of the Zohr field and of other fields started in 2018, mainly in Libya, Angola, and Ghana, and by the 2019 new project start-ups in Mexico, Egypt, and Algeria.

Eni said that, when excluding price and portfolio effects, this was the highest ever third quarter by production, and that further production ramp-up was anticipated in the fourth quarter, and onwards, boosted in part by Eni subsidiary Var Energi’s acquisition of ExxonMobil assets in Norway.

Eni CEO, Claudio Descalzi said: “From the end of the year, the [ExxonMobil] acquisition in Norway, adding further production of around 100 thousand barrels per day, in addition to the stabilizing contribution from our stake in the Ruwais refinery, which will increase our current refining capacity by 35%, will contribute to the robustness of our results.”

In its outlook for the remainder of the year, the company reaffirmed the target of a production plateau in the range of 1.87 -1.88 mmboe/d, assuming a Brent price forecast of 62 $/bbl.

“The projected range assumes a degree of volatility in the Asian demand for LNG and in Venezuelan production. As previously anticipated, production growth has been faster in the third quarter which was nonetheless affected by residual maintenance activity,” Eni said.

Production is expected to ramp-up further in the fourth quarter. New field startups and ramp-ups are projected to add approximately 250 kboe/d of new production in the year, mainly relating the Zohr field offshore Egypt, the achievement of full production at fields started in 2018, particularly in Libya, Ghana and Angola, as well as the fields started in 2019, mainly the Area 1 oil project offshore Mexico, Baltim SW in Egypt, North Berkine in Algeria and the Trestakk project in Norway and other additions.

Those increases are expected to more than offset mature field declines, Eni said.

Offshore Energy Today Staff

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