Eni Announce results for the half year 2019

Yesterday, Eni’s Board of Directors approved the Group results for the second quarter and first half of 2019 (unaudited).

Group results

Adjusted operating profit: €2.28 billion for the second quarter, down by 11% q-o-q (€4.63 billion in the first half, down by 6%). Excluding the impact of the loss of control over Eni Norge on the 2018 results to allow a-like-for-like comparison, and net of scenario effects and IFRS 16 accounting, the Group adjusted operating profit increased by 9% in the quarter (up by 7% in the first half).

Adjusted net profit: €0.56 billion for the quarter, down by 27% q-o-q (down by 24% excluding IFRS 16 accounting effects). €1.55 billion in the first half, down by 11% (down by 8% excluding IFRS 16 accounting effects).

Net profit: €0.42 billion and €1.52 billion in the quarter and the first half, respectively.

Robust growth in cash flow before working capital at replacement cost4: €3.39 billion, up by 43%, and €6.8 billion, up by 23%, in the second quarter and in the first half of 2019, respectively. These increases remain still remarkable even when excluding IFRS 16 accounting effects and discounting from the comparative periods certain extraordinary items which negatively affected the result by approximately €500 million: up by 18% to €3.3 billion in the second quarter; up by 9% to €6.5 billion in the first half of 2019.

Cash flow provided by operating activities: €6.61 billion in the first half, up by 27% (€4.52 billion in the second quarter, up by 49%), which was negatively affected by an extraordinary payment to settle an arbitration outcome (€330 million).

Capital expenditure and investment, net: €3.79 billion in the first half, net of the purchase of reserves in Alaska and Algeria (IFRS 16 effects were immaterial).
Net borrowings: €7.87 billion before the effect of IFRS 16; down by 5% from 2018 year-end. Including IFRS 16, net borrowings was €13.59 billion, of which around €2 billion pertains to the share of lease liabilities attributable to joint operators in Eni-led upstream project.

Leverage: 0.15 before the effect of IFRS 16, lower than the values at December 31, 2018 and March 31, 2019. Including IFRS 16, leverage was 0.27, or 0.23 excluding the aforementioned share of lease liabilities attributable to joint operators.

Buy-back: the buy-back program of the Eni share started at the end of May; as of June 30, 2019 3.69 million of shares have been repurchased for a total consideration of €52.4 million.

2019 interim dividend proposal: €0.43 per share5, out of a full-year dividend forecast of €0.86 per share.

Highlights
Exploration & Production

Hydrocarbon production: 1.83 million boe/d both in the second quarter and in the first half, almost unchanged y-o-y net of portfolio effects;

q-o-q change affected by the termination of the Intisar production contract in Libya from the third quarter of 2018; net of this impact and portfolio effects, production increased by 110 kboe/d in the quarter, up by 6.5% due to volume increases and lower maintenance activity (94 kboe/d, or 5.5% in the first half);

start-ups and ramp-ups added 218 kboe/d, driven by the achievement of full capacity at the Libyan projects started in 2018 (Wafa compression and Bahr Essalam phase 2) and by organic growth in Egypt (the Zohr ramp-up), Ghana and Angola.

Start-ups of new fields:
Mexico: the Miztón field offshore Area 1 started up in early production, the first step in the hub development with an estimated 2.1 billion barrels of oil equivalent in place. The start-up was obtained in less than two and half years after drilling the first well and in less than one year following approval of the development plan, demonstrating the effectiveness of Eni’s distinctive fast track approach to upstream development projects;

Egypt: oil production started up at the SW Meleiha development area leveraging on the 2018 discoveries;

confirmed the planned start-ups in the second half in Egypt and Algeria. On July 15, 2019, started up the Trestakk field in Norway. Started up also the Berkine oil field in Algeria.

Exploration:
main successes:
in the first half new discoveries totaled 350 mmboe of exploration resources:
Offshore Angola: a new successful exploration campaign has led to several discoveries in Block 15/06 (Eni operator with a 36.8% interest) with the last positive outcomes in the Ndungu and Agidigbo prospects, the second and the third discoveries since the beginning of the year following the Agogo discovery and the fifth since the resumption of exploration activities in 2018. The cumulative resources found are pegged at 1.8 billion barrels of oil in place;

Offshore Ghana: new gas and condensates discovery made in the CTP-Block 4 (Eni operator), with estimated resources in place ranging between 550-650 bcf of gas and 18-20 mmbbl of associated condensate, representing a potential commercial discovery due to its proximity to existing production infrastructures;

Norwegian North Sea: new oil and gas discoveries in the PL 869 license participated by Vår Energi;

Offshore Egypt: made a gas discovery in the exploration permit Nour (Eni operator with a 40% interest) and near field discovery made in the western desert with the Basma and Shemy prospects, onshore Nile delta with the El Qara North East 1 prospect and the Gulf of Suez with the Sidri South prospect. Some discoveries have already been linked to the producing facilities;

Vietman: gas and condensates discovery in the exploration permit Ken Bau, Block 114 (Eni operator with a 50% interest), located offshore Vietnam.

reloading Eni’s mineral interest portfolio: in the first half of 2019, acquired new exploration acreage covering 24,200 square kilometers, mainly in the Bahrain, the UAE, Mozambique, Algeria, Norway, Ivory Coast and Egypt.

The following agreements are going to be ratified:
Kazakhstan/Caspian Sea: an exploration and production license in the Abay concession located in shallow water, in joint venture with the national oil company KMG;
Ghana: the exploration and production license in Block WB03 (Eni operator with a 70% interest), in the medium deep waters of the rich Tano basin, located near the Sankofa producing field (OCTP project);

Argentina: the exploration license in block MLO 124 in the South offshore (Eni operator with an 80% interest)

Signed agreements to divest to Qatar Petroleum:

a 13.75% share in the exploration blocks L11A, L11B and L12, in deep offshore Kenya;

a 30% interest in the Tarfaya exploration license, offshore Morocco, which includes 12 exploration blocks. At the closing date, Eni will retain a 45% interest and the operatorship;

a 25.5% interest in Block A5-A, offshore Mozambique, where Eni is retaining the operatorship with a 34% interest.

Dual exploration model: divested a 20% interest of the Merakes discovery.

Rovuma LNG development plan approved by the Mozambique Government for the production, liquefaction and marketing of natural gas from three reservoirs in the Mamba complex in the Area 4 offshore the Rovuma basin.

Net capex:2 €3.16 billion in the first half, in line with the guidance.

Adjusted operating profit Exploration & Production: €2.14 billion, down by 22% q-o-q; €4.45 billion in the first half, down by 8%. Excluding the impact of the loss of control over Eni Norge on the 2018 results to allow a-like-for-like comparison, and net of scenario effects and IFRS 16 accounting, the adjusted operating profit decreased by 5% in the quarter (up by 5% in the first half).

Source / More : Eni results for the second quarter and half year 2019

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