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    Eni Plunges into Q4 Loss after Norwegian Buy


The company's Var Energi joint venture spent $4.5bn acquiring the Norwegian upstream business of ExxonMobil.

by: William Powell

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Eni Plunges into Q4 Loss after Norwegian Buy

Italian energy producer Eni reported a Q4 2019 loss of €1.89 ($2.1)bn, compared with a profit of €399mn the year before. A major expense was the purchase of ExxonMobil’s 150,000 barrels of oil equivalent (boe)/day Norwegian upstream business (Eni: 69.6%). It cost the Var Energi joint venture $4.5bn, which it paid from its own resources. 

But Norway is an important part of its output growth plan: "This strategic deal will make Eni and Var Energi the second biggest upstream player in Norway and boost the production target to over 350,000 boe/d by 2023 thanks to the development of the JV portfolio of projects," it said.

Eni also reported an adjusted Q4 2019 operating profit of €1.80bn and net income of €55mn, down 40% and 62% respectively on Q4 2018. 

CEO Claudio Descalzi said February 28 that 2019 had been tough, characterised by geopolitical tensions and much less favourable commodity prices than in 2018. But upstream had done well, with output at a record 1.92mn barrels of oil equivalent/day in Q4, which was up 3% on the year before, with a reserve replacement ratio of 117%.

The biggest increase in output came from Ghana and the Egyptian Zohr field but some Libyan fields reached plateau; there were also increases in Ghana and Angola and startups in Mexico, Norway, Egypt and Algeria. Output was 5.38bn ft³/d in the quarter, up 1% on the year. "These positives more than offset lower gas offtakes in certain countries due to worldwide gas oversupplies and mature field declines," it said. Lower gas prices, mainly in Europe, had a negative impact of €0.8bn in Q4 and €2.2bn for the full year. The average gas price it achieved was down 22% on Q4 2018.

The gas & power trading business however reported an adjusted net profit of €143mn in the fourth quarter 2019, more than three times the €42mn in Q4 2018. "The performance was driven by optimisations of gas and power assets portfolio in Europe which captured the high market volatility and by growth in the retail business," it said.