Eni to Book $4bn in Write-downs on Weaker Outlook
Italy's Eni said on July 6 it expected to book €3.5bn ($4bn) in post-tax impairments in the second quarter, after lowering its forecasts for oil prices, adding it is looking at ways to fast-track its decarbonisation plans.
Eni now sees Brent oil selling at $60/b in 2023, down from an earlier guidance of $70. It expects the benchmark to average $40, $48 and $55/b in the years 2020 to 2022 respectively, down from $45, $55 and $70 previously.
The major has also slashed its forecast for Italian spot gas prices to $5.5/mn Btu in 2023, from $7.8. Prices are seen averaging $3.0, $4.6 and $5.2/mn Btu in 2020-2022. Long-term refining margins in the Mediterranean area are expected at just below $5/b.
"Our changed long-term assumptions, reached four months after the outbreak of the Covid-19 pandemic, reflect our current expectations about future prices and will be incorporated in our processes of capital allocation," Eni CEO Claudio Descalzi said in a statement.
The major anticipates "post-tax impairment charges against non-current assets, including a devaluation of tax credits recorded in connection with tax-losses carryforwards, of €3.5bn, plus/minus 20%," it said. BP and Shell have similarly written billions of dollars off the value of their assets after slashing their price forecasts.
Most of Eni's write-downs relates to upstream operations.
The company is striving for an absolute emissions reduction of 80% by 2050, covering all of its products, and last month announced it would establish a new division to focus on renewable energies to help achieve this.
"We confirm our strategy to become a leader in the decarbonisation process, notwithstanding the enduring impacts of the Covid-19 pandemic on the global economy and the company," Descalzi said. "We are assessing how to speed up our plans."