Eni in the first half at a loss. However, the group confirms stable production in 2016 over 2015 and maintains the interim dividend at 40 cents. On the Stock Exchange, the reception is not positive but the stock is recovering and is at 13,47 euros (-1,46%) at 10 am.
The low prices of oil (-26%) on the international scene and of gas in Italy with the consequent slowdown in Exploration & Production, the arrest in Val d'Agri due to the ongoing judicial investigation, have had their effect felt above all on the second quarter 2016. And the growth in production achieved in other areas, the reduction in costs and lower depreciation and amortization only partially managed to mitigate the negative impact on the half year.
Claudio Descalzi, CEO of the Six-Legged Dog, underlines the positive sides of the half-year report: “In a weak market with the first signs of recovery – he says – Eni has achieved significant results. There hydrocarbon production exceeds expectations, offsetting the shutdown of activities in Val d'Agri and production outages in Nigeria. Development projects maintain time and cost forecasts and will enable a production increase of over 5% in 2017. Exploration, focused on near-field activities, has allowed expectations of new discoveries to be revised upwards in just six months. In the mid-downstream, we delivered positive results across all business areas due to the actions taken which will continue as planned. Overall, the strategy in place, the optimization actions and the reduction of the cost base they made it possible to compensate for part of the scenario effect with a operating profit benefit of €1 billion. We maintain a very solid capital structure based onself-financing of investments at a Brent price of $50/barrel. On these bases I will confirm the proposal to the BoD of a interim dividend of €0,40 per share. "
RED ACCOUNTS
Eni closes the first half of 2016 with a overall net loss of 1,24 billion euros against the profit of 735 million in the same period last year and the second quarter with a loss of 446 million (from -97 million). The net result of continuing operations in the half year shows a loss of 830 million (from +1,285 billion) and in the quarter of 446 million. Eni recalls that, due to theinterruption of negotiations with the Sk fund due to the sale of 70% of Versalis, the chemical sector is included in the continuing operations.
He rThe adjusted net result stood at -270 million in the semester (from a profit of 1,2 billion) ea -290 million in the quarter.
PRODUCTION DOWN IN THE SECOND QUARTER BUT 2016 ESTIMATIONS CONFIRMED
The data on hydrocarbon production confirm the negative impact of the shutdown in Vald'Agri. It reached 1,734 million barrels per day in the first half, up by 0,5% but it was heavy decline in the second quarter (-2,2%). Excluding the impact of the shutdown in Val d'Agri, production would have increased by 2,4% in the half year (+1,5% in the quarter). However, Eni confirms for the year the guidance of a stable production level compared to 2015.
Precisely in Val d'Agri Eni completed the plant modification requested by the magistrates on 8 July and is waiting for them to verify its correct implementation before proceeding with the definitive release from seizure of the Viggiano oil centre, which has been closed since 31 March. On June 1, Eni received from the Public Prosecutor's Office "the notification of the temporary release from seizure aimed at allowing the execution of some non-substantial modifications to the plant, aimed at resolving the disputed issue".
On the other hand in the semester they were obtained 5 significant production starts, including Goliat in the Barents Sea, of the 6 budgeted. Confirmed a contribution from start-ups/ramp-ups of approximately 290 kboe/d for 2016, including production from Nooros, Egypt. The ongoing development projects are confirmed in terms of timing and costs in support of the production increase of more than 5% in 2017 and with an equity contribution of 500 kboe/d over the period of the plan. On the exploration front, 550 million boe of new resources are mainly near-field. Full-year guidance revised upwards to 600 mmboe of new resources versus initial target of 400 mmboe.
For 2016 expected a stable production level compared to 2015 thanks to the rampups and start-ups of new fields in Norway, Egypt, Angola, Venezuela and Congo. These increases, Eni underlines, will be able to fully absorb the production interruption in Val d'Agri of about four months, the declines of mature fields and the lower contribution of production one-offs, the note adds.
AT DESCALZI INTERNAL CONTROL, COMPLIANCE AND VERSALIS
The BoD has also taken some relevant decisions on the subject of internal control and risk management, to be implemented from September. Decisions that indicate the CEO's willingness to directly follow the delicate and thorny issue of relations on a local basis both in Italy and with the producing countries, a delicate issue from which complicated judicial investigations have arisen. In detail, the Integrated Risk Management function, responsible for supporting Eni's management in identifying and monitoring the company's main risks, reports directly to the Chief Executive Officer.
The Integrity Compliance Department was then set up, with the responsibility of overseeing the legal compliance matters who will report to the chief financial officer. This transformation represents an intermediate step with respect to the final organizational structure which will see, by December 2016, the establishment of a structure responsible for Eni's compliance reporting directly to the Chief Executive Officer. In the end, Descalzi assumes direct control over Versalis.
