Eni Announce first quarter 2023 results
Q1 2023 adjusted profit before tax of €5.0 bln was only 5% lower than Q1 2022 despite a 20% fall in crude oil price and a 42% drop in gas price.
Financial highlights
This performance reflects a highly resilient E&P result and an outstanding contribution from the GGP business plus steady earnings from Sustainable Mobility & Refining. Of note is the 30% rise in adjusted EBIT and 14% rise in adjusted profit before tax on Q4 2022 despite the weakening Upstream scenario.
E&P earned €2.8 bln of adjusted EBIT, mainly affected by weaker realized prices and the deconsolidation of the Angolan activities. Including the contribution of Azule, the Q1 2023 pro-forma EBIT increased to €2.93 bln, a reduction of 33% year on year.
GGP earned €1.37 bln of adjusted EBIT, 47% higher than the Q1 2022, driven by optimization and trading activities.
Eni Sustainable Mobility, operational as of January 1, 2023, delivered €0.14 bln of adjusted EBIT, up by €0.07 bln compared to the proforma adjusted EBIT of the Q1 2022 following the restatement of the comparative period[1].
The Refining business earned €0.13 bln of adjusted EBIT compared to a loss of €0.04 bln during Q1 2022. The improvement was driven by higher benchmark refining margins, with Eni’s SERM up to 11 $/bbl (vs a negative value in 2022) but negatively impacted by planned turnaround activity at important upgrading refinery units and lower leverage to natural gas price energy costs than in the benchmark due to efficiency initiatives already undertaken.
Versalis was negatively affected by lower demand and market uncertainties, which held back purchase decisions by resellers and continued competitive pressures of products from Middle and East Asia.
Plenitude & Power delivered solid results with €0.19 bln of adjusted EBIT (flat year on year) helped by the ramp up in the renewable installed capacity and production volumes and optimizations in the business of power generation from gas-fired plants. Plenitude generated €0.23 bln of adjusted EBITDA despite challenging conditions.
Q1 2023 adjusted net profit attributable to Eni shareholders was €2.9 bln and, compared with Q1 2022, was 11% lower impacted by lower oil and gas prices and the UK energy profit levy but significantly offset by the strong underlying business performance of the Group.
In Q1 2023, the Group adjusted operating cash flow before working capital at replacement cost was €5.3 bln, largely exceeding the cash outflows related to organic capex of €2.2 bln and dividend payments (€0.8 bln). Seasonal factors that typically shape working capital requirements in the first quarter accounted for the bulk of the excess cashflow with other investing activities also a €0.2 bln outflow and the net effect of acquisition and disposal amounting to €0.3 bln.
In March 2023, Eni paid the third instalment of the 2022 dividend of €0.22 per share. The fourth tranche of €0.22 per share will be paid in May 2023.
Net borrowings ex-IFRS 16 as of March 31, 2023, were €7.8 bln, and Group leverage stood at 0.14, versus 0.13 as of December 31, 2022.
Main business developments
Exploration & Production
In Q1 2023 around 200 mln boe of new resources were added to the reserve base, driven mainly by the discoveries made off Cyprus, Mexico and Egypt. A positive appraisal of prior findings was also made in Abu Dhabi.
In March, Eni announced the Yatzil discovery in the Block 7 exploration prospect (operated by Eni with a 45% w.i.), in the Sureste Basin, off Mexico. Yatzil was the second commitment well of Block 7 and the eighth successful exploration well drilled by Eni in this basin.
In January, a milestone agreement was signed with the National Oil Corporation of Libya (NOC) to develop the large gas reserves of A&E Structures, a strategic project between Eni and NOC, in contractual Area D, targeting to begin production in 2026. The project will leverage synergies with the Mellitah Complex to reach a plateau of 750 mmcf/d, with volumes destined both to the Libyan domestic market and mainland Italy through the existing Greenstream pipeline, connecting Mellitah to Sicily. The project also comprises construction of an onshore hub for carbon capture and storage.
In January, a 30% interest in offshore exploration Blocks 4 and 9, in Lebanon, operated by TotalEnergies, was farmed out to QatarEnergy. Eni will retain a 35% interest in the venture.
In February, Eni closed the acquisition of bp’s business in Algeria, relating to the two gas-producing concessions “In Amenas” and “In Salah”, jointly operated with Sonatrach and Equinor.
In April, the FPSO Firenze sailed out from Dubai to the Baleine field in Côte d’Ivoire. The FPSO to be renamed Baleine upon its mooring has been refurbished and upgraded to increase its processing capacity up to 15,000 bbl/d of oil and around 25 mmcf/d of associated gas.
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