Eni closes the third quarter with a net loss of 0,5 billion in the quarter and by 7,84 billion in the nine months due to the devaluations that the national giant, like other majors, was forced to make. It is the Covid-19 crisis which, added to the oversupply of oil & gas, puts the large private oil companies under deep stress. The keyword is oversupply as the pandemic contracts demand and the world faces an energy tradition of an epochal nature. Eni was the forerunner, now the quarterly Total, Shell and ExxonMobil will follow, all scheduled for this week.
Returning to Eni, the adjusted data show an adjusted net quarterly loss of €0,15 billion in the third quarter and €0,81 billion in the nine months. But it is precisely the devaluations that make the difference. Eni declares “pre-tax write-downs of non-current assets of €2,75 billion mainly related to oil & gas assets and refining plants according to the revision of the hydrocarbon price/margin scenario, from the adjustment of the book value of the inventory to current prices (-€1,4 billion), as well as the write-down of tax credits for €0,8 billion”.
In the press release, however, the group underlines how "the quarter records a rebound in performance due to a better balance of oil fundamentals in a context of slow recovery in economic activity and uncertainties regarding the containment of the pandemic, with repercussions on the propensity of consumers to travel" . The 2020 base dividend will be guaranteed, assures the group.
Il adjusted operating result shows a profit of 0,54 billion in the third quarter, a significant improvement over the loss of the second quarter 2020 (1 billion). The annual comparison (-75%) remains penalized by the still recessionary scenario due to the effects of the pandemic. In the nine months, adjusted operating profit fell to €1,41 billion (-79% compared to 2019). There hydrocarbon production it contracted in the quarter by 10% to 1,7 million boe/day and by 6% in 9 months.
In the press release released on the quarterly data, Eni recalls the measures undertaken during the year to deal with the critical situation of the sector and in particular: the 33% reduction in investments - now limited to 3,76 billion in the nine months - achieved with the plan review in March; the push forward on green activities (renewables and biofuels); the reorganization of activities to separate those traditions from the renewable ones.
“In a market context that remains very difficult – it is the comment of CEO Claudio Descalzi – we are successfully containing the negative impacts of this crisis and progressing with our decarbonisation strategy. In the quarter, with oil and gas prices down approximately 30% and refining margins down 90%, we achieved excellent results, significantly exceeding market expectations. In the E&P area, even with Brent at $43/barrel, we achieved a production level in line with expectations, and an EBIT of €0,52 billion, double the value compared to the consensus. Over the nine months, thanks to the reduction in investments and costs implemented in the first few months of the year, we generated an operating cash flow of over €5 billion, against a level of capital expenditure of €3,8 billion. We thus confirm the solidity of our capital structure, further strengthened by the two €3 billion hybrid issues carried out in October, which allow us to keep leverage below 30%”.
"We continue to work on the dividend policy to ensure the remuneration that we announced to the financial community in the summer," Eni CFO Francresco Gattei said on a conference call. In July Eni announced a basic annual dividend of 0,36 euro per share, commensurate with an annual Brent average of at least $45/barrel, and a variable component increasing as the price increases up to $60/barrel, beyond which the buy-back plan will be reactivated.
