Eni Stays Loss-Making on Flat Production
Eni’s net loss narrowed to €562mn in 3Q 2016, a year on year decline of 29%, it said October 28. Adjusted operating profit however was 66% lower at €258mn, owing to low prices and the unplanned shutdown of its Val d’Agri oilfield in southern Italy, only partially offset by efficiency gains. Moreover Eni’s adjusted net 3Q loss almost quadrupled to €484mn.
The Italian major said it achieved start-up at all six large projects budgeted for 2016, with new fields and ramp-ups expected to add some 280,000 boe/d to the production level for FY2016.
But shutdowns of its Italian field, and Goliat offshore northern Norway, meant Eni’s production inched only 0.4% higher to 1.71mn barrels of oil equivalent per day. Val d’Agri and Goliat (both oil) have since resumed production, so Eni said FY 2016 production guidance is “essentially unchanged.”
Eni CEO Claudio Descalzi said: “We have stabilised the production plateau at the Goliat oilfield, restarted operations from Kashagan and ramped up the Nooros field, the latter being testament to the success of our exploration strategy that supports a reduction in time-to-market.” Without the unplanned shutdowns, 3Q production would have been 2.2% higher, the company added.
In Kazakhstan, Kashagan is already producing some 100,000 b/d at 100%, CFO Mauricio Mondazzi told analysts, with 370,000 b/d still on target for end-2017. Some 200,000 b/d was even likely by end-2016, added upstream chief Antonio Vella.
Among recent highlights, Eni listed this month’s signature of a long-term LNG supply contract by the planned Coral South floating LNG project to BP for 3.3mn mt/yr – although a final investment decision on the project is still pending – plus continued progress in drilling the giant Zohr field and the rapid ramp-up of Nooros, both offshore Egypt. Mondazzi reaffirmed that Zohr is expected to start production on target late 2017.
Eni also resumed exploration onshore Tunisia and acquired a 1228 km² block offshore Montenegro with Novatek.
Gas & Power made an adjusted operating loss of €374mn, with Italy’s PSV price a quarter lower year on year, LNG sales margins lower, and the forward scenario remaining weak, said Mondazzi. Eni’s natural gas sales were 20bn m³, or 0.5bn (or 2.5%) lower.
Eni said Brent was 9% lower at $45.85/b in 3Q 2016, with its 3Q refining margin 67% lower at $3.3/b (from $10 in 3Q 2015). This had firmed to $5/b this month.
Mark Smedley