ENI NET LOSS €1 BLN
ENI - full year 2016 and fourth quarter results
Highlights and outlook
Continuing strong exploration track record: discovered 1.1 billion boe of additional resources at a cost of 0.6 $/boe. Additions to the Company's resources backlog of 3.4 billion boe in the latest 3 years, at a cost of 1 $/boe. Promising new prospects to be drilled in future years
Divested a 40% interest in Zohr, proving the effectiveness of our dual exploration model
Organic reserves replacement ratio surged to 193%, the best ever performance in Eni's history. The 2016 reserves replacement ratio remains very robust at 139%, also considering the 40% sale of Zohr on a pro forma basis
Kashagan and Goliat in production
2016 hydrocarbon production: 1.76 million boe/d in the year, in line with 2015, despite the Val d'Agri shutdown; 1.86 million boe/d in the quarter (down by 1.5%)
Progressed construction activities at our development projects expected to come on stream in 2017(Jangkrik - Indonesia, OCTP oil - Ghana and Zohr - Egypt). In February, started-up the East Hub project in Angola, five months earlier than scheduled. These projects, together with the ramp-up of 2016 new production from Kashagan and Goliat, will strongly contribute to the cash generation in 2017 and following years
Opex efficiency above expectations at 6.2 $/boe compared to 7.2 $/boe in 2015
Confirmed the goal of structural breakeven from 2017 owing also to the already achieved gas contract renegotiations and reductions in logistic costs
R&M and Chemicals
Refinery breakeven margin reduced to 4.2 $/bl (compared with 5.2 $/bl in 2015)
Green refinery projects on schedule
The Chemical business Ebit1 of €300 million in 2016 reflects the success of the segment's restructuring
Consolidated financial results2
Strong cash generation in the fourth quarter of €3.2 billion
FY normalized cash flow from operations3 of €8.3 billion, covering 95% of capex4 in an unfavorable oil price environment (Brent at 44 $/bl)
Improved prospects of organic production growth over the next four years notwithstanding a 19% capex reduction y-o-y
All mid-downstream businesses cash positive this year
Fourth quarter consolidated adjusted operating profit at €1.29 billion, up by 103% from the fourth quarter of 2015
FY adjusted operating profit of €2.32 billion, down by €2.17 billion (or 48%), due to the unfavorable oil price environment (-€3.3 billion) and the Val d'Agri shutdown. Efficiency measures and lower costs help to offset the effect of the low oil price by €1.7 billion
Fourth quarter consolidated net adjusted profit of €0.46 billion founded on a robust upstream recovery. FY adjusted net result roughly at breakeven (-€0.34 billion)
Disposals closed/agreed this year of €2.6 billion, approximately 40% of the 2016-2019 four-year target of €7 billion, announced in March 2016
Net debt reduced to €14.8 billion, equating to a leverage ratio of 0.28. Pro-forma leverage ratio to include 40% Zohr disposal at 0.24
2016 dividend: €0.80 of which €0.40 already paid as interim dividend
Claudio Descalzi, Eni's Chief Executive Officer, commented:
"The 2016 results mark the successful conclusion of a radical transformation process. Over the past three years, Eni has restructured to withstand one of the most complex environments in the history of the oil industry, while strengthening its growth prospects and preserving a robust balance sheet. Our future growth trajectory will leverage on the key achievements made in this period: a strong production in Q4 of 1.86 million boe/d, our record proved reserve replacement ratio, a well-stocked pipeline of new, high quality projects which will contribute to an expected production growth rate of 3% on average in the next four-year period, and the advanced restructuring of our middownstream businesses. The solidity of our balance sheet has been preserved by maintaining a sustainable level of gearing, while Eni has been the only Major to reduce its leverage during the 2014-2016 period. In light of these achievements, we intend to propose at the next Annual General Shareholders Meeting the distribution of a cash dividend of €0.8 per share in 2016. Looking to the future, we are able to reaffirm our progressive remuneration policy, in line with the expected improvement of commodity prices and our own financial performance."
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U.S. EIA - Crude oil production in Iraq averaged 4.5 million barrels per day (b/d) through August 2018, up from 4.4 million b/d in 2017. Iraq’s crude oil production has been steadily increasing since declines in the late 1990s and early 2000s, and it has nearly doubled over the past decade.
PLATTS - Oil prices averaging $70/b in 2018 underscore the need for more investment in new supply, UAE energy minister Suhail al-Mazrouei told delegates at the Atlantic Council's Global Energy Forum in Abu Dhabi on Saturday.
PLATTS - Coal exports from Russia in 2018 came to 191 million mt, a rise of 3.4% on the year, according to the latest data from the ministry of energy, making the 2018 volume the highest since S&P Global Platts began collecting data in 2013.
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