Eni’s adjusted 4Q profit up 55pct. Full year O&G output at all-time-high

Italian oil company Eni posted a 55 rise in adjusted net profit, reporting €1.46 billion in the fourth quarter of 2018, compared to adjusted net profit of 943 million euros in the corresponding quarter a year ago.

According to Reuters, Eni’s adjusted net profit results beat an analyst consensus forecast 1.19 billion euros.

Net profit fell to 499 million euros, down from 2,047 billion in the fourth quarter of 2017. Worth noting, the fourth quarter of 2017 benefitted from approximately €2,7 billion of net gains achieved in connection with the disposal of interests in Zohr gas field offshore Egypt and Area 4 in Mozambique.

Adjusted profit for the full year almost doubled, as it the Italian company reported a number of 4,6 billion euros, up from 2,38 billion euros in 2017.

Hydrocarbon production dipped slightly during the quarter, as it was 1,87 million barrels of oil equivalent a day, versus 1,89 in the fourth quarter of the previous year.

Overall, for the full year, production rose to 1,85 million barrels of oil per day equivalent, up from 1,81 million in 4Q 2017. According to Eni’s CEO Claudio Descalzi, the full-year level of 1,85 million barrels a day was the company’s highest ever level of production.

This performance was driven by ramp-ups at fields started up in 2017, mainly in Egypt, Indonesia, Angola, Congo and Ghana and the 2018 start-ups (with a total contribution of over 300 kboe/d), higher production at the Kashagan field, Goliat field in Norway and Val d’Agri in Italy, as well as the acquisition of the two Concession Agreements Lower Zakum (5%) and Umm Shaif/Nasr (10%) producing offshore in the United Arab Emirates.

Eni said production performance was recorded despite a decline in gas demand in certain countries with a negative impact of approximately 1 percentage point in the year and other one-off events (mainly the termination in the second quarter of the Intisar production contract in Libya).

Eni’s CEO said the company’s proven reserves replacement ratio was once again higher than 100%, for a three‐year average of 131%.

Commenting on the results, Eni CEO said: “2018 was a strong year for Eni both financially and operationally, which was characterized by a robust fourth quarter performance. We successfully optimized our portfolio and strengthened it for the future, and we doubled operating and net profit, while the price of Brent averaged 25% higher than 2017 in euro terms. We increased cash flow from operations by 35% allowing us, after investments, to cover our €3 billion dividend while also reducing net debt by approximately the same amount to €8.3 billion.

“Capital expenditure continues to be stable, demonstrating our disciplined management approach. In our Upstream division we achieved our highest ever level of production of 1.85 million barrels per day, with a cash flow per
barrel of $22.5, achieving our 2022 target four years early. ”

“With a view to the future we strengthened and geographically diversified our Upstream portfolio, expanding our growth prospects with the establishment of Vår Energi in Norway and building of a significant presence in the Middle East, while keeping costs low and maintaining a high level of profitability. In Refining, the acquisition of a stake in Ruwais increased our downstream capacity by 35%, representing the most efficient and profitable option for expansion, increasing the balance of our portfolio and making it more resilient to future cyclical pressures.

“On the basis of these results, we will propose payment of a dividend of €0.83 per share at the Board of Directors’ meeting to be held on 15 March.”