Oil at its lowest weighs on Eni's quarterly report which, however, increases production, reduces debt and confirms the 2016 guidance. The results are substantially in line with the consensus: adjusted operating result to 470 million, down 69% compared to the first quarter of 2015. The drop, expected by the market, is due to the Exploration & Production sector which recorded a reduction of 1 billion. The drop was caused by the lowest oil prices (crude was around 26-30 dollars in the first quarter against the current 45). The sharp reduction in prices (-37%) has been attenuated, explains the ENI press release, from production growth reaching 1,75 million barrels/day (+3,4%), cost reduction and lower depreciation. Eni shares gain 0,21% in Piazza Affari at 14,43 euros.
OPERATING RESULTS
Il adjusted net result is negative by €77 million compared to a profit of €700 million in the first quarter of 2015. The reduction is due to the first quarter of 2015. The unadjusted net loss is 803 million against a positive 617 in the corresponding period of 2015. Going back to the adjusted data, the press release specifies that the reduction "is due to the drop in operating profit and the less than proportional reduction in tax charges mainly attributable to the E&P sector due the concentration of positive pre-tax results in PSA contracts which, more resilient in decreasing scenarios, are however characterized by higher average tax rates”, explains Eni's note. So the quarterly also discounts a tax effect.
The results will be illustrated to the analysts at 12, via conference call, by theCEO Claudio Descalzi who meanwhile comments on the data for the quarter as follows: ""In the first quarter of 2016, in a scenario of acute weakness in commodity prices, Eni achieved important results in the execution of the organic growth strategy, spending selection and increased efficiency”. Above all, the CEO underlines the value of the growing productions which “have benefited from the start-up of Goliat and three other new fields; at the same time we strengthened the foundations for growth in the following years thanks to the final investment decision in the gas giant Zohr, the approval of the Coral development plan by the Mozambique authorities and the continued exploration successes", continues Descalzi , who concludes: “The group's financial and operating results allow us to confirm the 2016 guidance, with particular reference to the 20% capex containment, their organic financing in a $50 scenario and the control of the leverage, now among the lowest in the industry".
PAYABLES AND DISPOSAL
In addition to the strong increase in production, in fact, the other salient data of the quarterly concern the financial balance: thenet financial debt at March 31, 2016 decreased to €12,21 billion with a reduction of €4,65 billion compared to 2015 (16,86 billion at the end of the year) thanks to the closing of the Saipem transaction "which resulted in the repayment of intercompany financial receivables of €5,8 billion - the Eni note continues - and the collection of the sale of the 12,503% stake to FSI for €0,46 billion, as well as an outlay for the subscription - share of the share capital increase of the ex-subsidiary for €1,07 billion”.
In particular, the net cash flow from operating activities of continuing operations on a standalone basis amounted to €1,27 billion,”a reduction of 56% compared to the same period of the previous year”. The disposals made it possible to collect 810 million and “concerned over 12,503% of Saipem, la residual equity investment in Snam due to the exercise of the conversion right by the bondholders (33 million). “These flows covered part of the requirements relating to technical investments in the quarter (2,42 billion) and the increase in Saipem's share capital”.
Finally the leverage: the ratio of net financial debt to shareholders' equity including non-controlling interests has decreased a 0,23 to 31 March 2016 compared to 0,30 at December 31, 2015, "due to the reduction in net financial debt, partly offset by the decrease in total equity determined by the result for the year, by the effect of the deconsolidation of Saipem's minorities, as well as by the negative change of the exchange differences from the translation of the financial statements of the subsidiaries whose functional currency is the dollar” with a euro/dollar exchange rate that rose by 4,6% in the closing figures at the end of 2015 and at 31 March 2016.
