First quarter results released Friday from majors Eni and Total showed that Europe's oil and gas industry enjoyed a robust start to the year.
Italy's Eni announced its adjusted operating profit for the three months to March 31, 2012 increased 26.5 percent to $8.5 billion (EUR 6.5 billion) thanks to the ongoing recovery in its production activities in Libya and higher oil prices, and in spite of the difficult market environment facing its Gas & Power, Refining & Marketing and Chemical operations.
"In exploration, we have continued to deliver strong results with further important discoveries in Mozambique and in the Barents Sea. I’m very pleased with the agreement we have recently signed with Rosneft as it underpins our exploration opportunities for many years to come, further boosting our prospects for long-term growth," said Eni Chief Executive Officer Paolo Scaroni.
Although French major Total's adjusted net income for the first quarter was down 5 percent compared with Q1 2011 at $4.03 billion (EUR 3.1 billion), this profit was on the back of sales that had increased 6.5 percent to $67.17 billion (EUR 51.17 billion).
"In the context of oil prices that were favorable for upstream but difficult for refining & chemicals activities, the group is satisfied with its first quarter profit of EUR 3.1 billion ($4.1 billion)," said Total Chairman and CEO Christophe de Margerie, who highlighted the group had achieved first production at its Usan field in Nigeria, its Islay field offshore Scotland, and at Bongkot South in the Gulf of Thailand.
But, de Margerie also stressed that the recent gas leak at the Elgin platform in the North Sea also confirmed the "crucial importance" of safety in the firm's operations.
"We cannot envisage profitable growth without prioritizing personal safety and operational reliability," de Margerie said. "The entire company recognizes that the complexity of our operations requires an even stronger commitment to safety and environmental protection."
Meanwhile, in Eastern Europe, Hungary's leading oil and gas company MOL reported Friday it grew its EBITDA operating profit by 6 percent during 2011 to a record $3 billion (HUF 645 billion).
These robust results from European companies follow on from Thursday's news that Royal Dutch Shell produced a forecast-busting net income of $7.28 billion during the first three months of the year – which was up some 16 percent on Q1 2011.
As far as outlook is concerned, Eni said it expects the rest of 2012 to be "challenging" due to signs of a continuing economic slowdown, particularly in the eurozone, and volatile market conditions.
Nevertheless, the Italian firm expects production of liquids and natural gas to grow compared to 2011, driven by a progressive recovery in the company's Libyan output to achieve pre-crisis levels. These increases will be partially offset by mature field declines and the impact of the shutdown of the Elgin/Franklin gas field (in which Eni has a 21.8 percent stake), added the firm.
After starting production on three major projects in Nigeria, the UK North Sea and in Thailand during Q1 2012, Total is now turning its attention to starting up Sulige in China and its Angola LNG project.
MOL, meanwhile, said it expects to fund capital expenditure of $2 billion per annum during the next two years from its operational cash flow. The Hungarian firm said its focus will be on high-return projects at both its Upstream and Downstream business divisions.
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