Eni Announce first quarter 2021 results
Eni’s Board of Directors, chaired by Lucia Calvosa, yesterday approved the unaudited consolidated results for the first quarter of 2021.
- A strengthened upstream price environment in the first quarter 2021 was driven by a recovery in the main market benchmarks: the Brent crude at 61 $/bbl on average was up by 21% and 38% respectively from the first quarter and fourth quarter 2020. Eni’s hydrocarbons realized prices did not capture this improvement entirely due to the appreciation of the cross-rate EUR vs. USD which was up by about 10%.
- Eni’s benchmark refining margin “SERM” was in negative territory (down to minus 0.6 $/bbl) due to the impact of lockdowns and a delayed recovery in air traffic.
- Adjusted EBIT: €1.3 billion in the first quarter of 2021, a strong improvement from the fourth quarter of 2020 (up by 171%) with flat hydrocarbon production (1.7 million boe/d). The first quarter 2021 EBIT was unchanged from the first quarter 2020 notwithstanding 86 kboe/d of lower production, mainly in liquids, and the negative performances of R&M (down by €240 million) driven by an unfavourable refining scenario (the SERM was negative) and lower sales volumes due to regional lockdowns (a 10% decrease at the network of service stations), and of the GGP business which was down by €263 million mainly due to one-off positive contributions from portfolio optimization in the year-ago quarter and narrowing spreads between the PSV vs. the TTF spot gas prices. The E&P segment EBIT was up by €341 million due to higher crude oil prices. Versalis (up by €104 million) responded to the unusual industry-wide disruption from extreme winter weather in the US by leveraging on higher plant availability against the backdrop of an improving demand for commodities.
- Adjusted net profit: €270 million, almost five-fold the result reported in the first quarter 2020.
- Cash flow from operations before changes in working capital at replacement cost: €1.96 billion and net capex of €1.4 billion (-27% vs. IQ 2020). Organic free cash flow generation was robust at approximately €600 million before changes in working capital.
- Portfolio: net cash outflows of about €400 million, fully invested in the green business.
- Net borrowings ante IFRS 16: €12.2 billion, a slight increase vs. December 31, 2020 due to the financing of M&A transactions and currency translation effects. Leverage was flat at 31%.
- The rebalancing of the global oil market and a recovery in fuel consumption in the course of 2021 are exposed to continued risk from the ongoing impact of the COVID-19 pandemic in a number of large global economies, such as in multiple West European countries that are still in lockdown, as well as new restrictions being reimposed in other parts of the world.
- Reaffirming the guidance for hydrocarbon production at about 1.7 million boe/d for the FY, assuming OPEC+ cuts of about 35 kboe/d through the year on average, and an organic capex spending forecast for 2021 of approximately €6 billion; forecast cash flow from operations before working capital requirements at replacement cost higher than €9 billion at current Brent prices of 60 $/bbl.
- Cash neutrality at a Brent price of 51 $/bbl to fund organic capex and the floor dividend.
- The outlook for oil prices will be reassessed in Eni’s 2021 interim report in July for the purpose of establishing the variable dividend as well as in view of the possible resumption of the buy-back of the Eni share. The floor dividend set at €0.36 per share will be complemented by a variable dividend, which amount will increase when the Brent reference price for 2021 rises above the threshold of 43 $/bbl. The share buy-back program is expected to resume with a Brent reference price 2021 of at least 56 $/bbl.
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