ENI LOSS €0.95 BLN
Third Quarter Highlights and FY 2015 outlook
- Divestment of interest in Saipem: agreed the terms of the sale of a 12.5% interest to FSI. At closing, expected in first quarter of 2016, Saipem will be derecognized and Eni will be reimbursed of its financing receivables by €6.1 billion net. Pro-forma leverage as of September 30 decreasing by 8 percentage points.
- Exploration success: discovered more than 1.2 bn boe resources, at an average cost of 0.6 $/boe versus a planned target of 500 mm boe in 2015 at an average cost of more than 2 $/boe. Giant Zohr discovery in the Mediterranean Sea.
- Strong hydrocarbon production growth: up 8.1% to 1.703 million boe/d in the quarter (up 8.7% in the nine months). Excluding price effects, production increased by 4.3% (up 4.9% in the nine months). FY 2015 production is now seen growing by about 9%, up from a prior guidance of more than 7%.
- Robust R&M and Chemicals performance: best adjusted EBIT since the third quarter of 2006 due to the restructuring plan and a favourable trading environment. FCF is projected to be positive as early as in 2015, anticipating the original plan by two years.
- Improved G&P performance: enhanced adjusted EBIT guidance, now expected to substantially break even in 2015, in spite of delayed settlement of ongoing arbitrations.
- Further cost reduction: raised the target reduction of FY capex to 17% from a prior guidance of a 14% cut; opex per barrel expected to decrease by 12% to 7.3 $/bl (previous guidance was down by 7%).
- Self-financed capex: when excluding Saipem, capex organically financed as early as in 2015 at a Brent scenario of 55 $/b.
- Entrance in new countries: upstream of Mexico with the operatorship of three offshore oilfields.
- Cash flow: €1.71 billion for the quarter (€7.39 billion in the nine months).
- Adjusted operating profit excluding Saipem: €0.6 billion in the quarter (down 79%); €3.51 billion for the nine months (down 60%).
- Adjusted net profit excluding Saipem: loss of €0.29 billion in the quarter; €0.76 billion for the nine months (down 76%).
- Net loss: €0.95 billion for the quarter; €0.36 billion in the nine months.
- Net borrowings: €18.41 billion at the end of September; leverage at 0.30 (0.22 as of December 31, 2014).
Claudio Descalzi, Chief Executive Officer, commented:
"Saipem's stake sale and deconsolidation marks another significant step in Eni's transformation as we refocus on our core business.
It increases our financial flexibility, freeing up resources to support our strategic plan. In the meantime we retain a significant share in Saipem and we will participate in its capital increase, strengthening its financial solidity and the execution of its new business plan. In the quarter, despite a weak oil price environment, Eni continued to deliver strong growth in upstream and important progress in restructuring the mid and downstream businesses. In E&P, we have increased our full year production guidance for the second time this year, almost doubling our original target. We have also more than doubled our resources target after discovering 1.2 billion barrels of new resources over the past nine months. This has all been achieved at a lower exploration cost. Meanwhile, we have improved our guidance for G&P, while R&M and Chemicals are on track to deliver an excellent performance and positive cash generation in 2015. These businesses continue to benefit from the restructuring and efficiency initiatives we have been implementing and from the favourable pricing environment. These actions, along with the further optimization of our investments during the year and the improvement of our operational cost structure, will allow us to cover our investments in 2015 with organic cash flow, excluding Saipem and considering a 55 $/b oil price scenario."
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AN - China National Offshore Oil Corp. (CNOOC) is willing to invest $3 billion in its existing oil and gas operation in Nigeria, the Nigerian National Petroleum Corporation (NNPC) said on Sunday following a meeting with the Chinese in Abuja.
REUTERS - Production at Libya’s giant Sharara oil field was expected to fall by at least 160,000 barrels per day (bpd) on Saturday after two staff were abducted in an attack by an unknown group, the National Oil Corporation (NOC) said.
IMF - Output grew by 3.8 percent in 2017, underpinned by a resilient non-hydrocarbon sector, with robust implementation of GCC-funded projects as well as strong activity in the financial, hospitality, and education sectors. The banking system remains stable with large capital buffers. Growth is projected to decelerate over the medium term.
IMF - Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging. Inflation declined to its lowest level in more than two years. Real GDP expanded by 2 percent in the first quarter of 2018 compared to the first quarter of last year. However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending.