KEYFACT Energy
Eni’s Board of Directors approved the Group results for the first quarter of 2018 (unaudited).
Commenting on the results, Claudio Descalzi, CEO of Eni, remarked:
“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.”
Highlights
- Acquired interests in the concessions Lower Zakum (5%) and Umm Shaif/Nasr (10%) currently producing off Abu Dhabi, granting Eni access to a Country with great mineral potential.
- Dual exploration model: agreed the divestment to Mubadala Petroleum, a UAE-based company, of a 10% stake in the Shorouk concession, offshore Egypt, where the super-giant Zohr gas field is located.
- Started up oil production at the Ochigufu field, in Block 15/06 off Angola, just eighteen months since the presentation of the development plan. The field’s production plateau will add 25,000 barrels to the current production levels of the Block 15/06.
- Indonesia: development plan of the Merakes gas field off Indonesia approved by the relevant authorities, leveraging synergies with nearby Jangkrik producing field.
- Gas discovery in Block 6 (Eni’s interest 50%, operator), offshore Cyprus; confirmed the extension of the “Zohr like” play.
- Awarded two Exploration and Production Agreements with the Republic of Lebanon covering Blocks 4 and 9 (Eni’s interest 40%), in deep offshore.
- Awarded rights to Block 28 (Eni’s interest 75%, operator) and Block 24 (Eni’s interest 65%, operator) located in the medium-deep waters of the Cuenca Salina Basin, Mexico.
- Algeria: strengthened the strategic partnership with Sonatrach to explore and develop new gas resources.
- Exploration & Production adjusted operating profit: €2.1 billion, up by 47% q-o-q. In the same period the Brent price in euro terms increased by 8%.
Strong growth reported in hydrocarbon production:
- up by 4% q-o-q at 1.87 million boe/d, in line with the FY 2018 guidance. Net of price effects in PSAs, the growth rate was 4.4%;
- production start-ups and ramp-ups contributed 238 kboe/d.
Group results
- Adjusted operating profit: €2.38 billion, up by 30% q-o-q.
- Adjusted net profit: €0.98 billion, up by 31% q-o-q.
- Net profit: €0.95 billion.
- Strong cash flow from operations: €2.19 billion, up by 13% q-o-q.
- Cash flow from operations before changes in working capital at replacement cost at €3.17 billion, up by 22% q-o-q.
- Net capex: €1.78 billion1; self-financing ratio of net capex at approximately 123%.
- Net borrowings: €11.28 billion.
- Leverage: 0.23, unchanged compared to December 31, 2017.
Exploration & Production outlook
Hydrocarbon production: the Company has raised its initial growth forecast and now expects a 4% increase for the FY 2018 vs. 2017, equalling to a production level of about 1.9 million boe/d. This growth is expected to 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 (Norway), as well as the contribution of the new venture in UAE. These increases are expected to be partly offset principally by mature field declines.