Eni Upstream Business Hit by Low Oil Price

Eni Upstream Business Hit by Low Oil Price
Italy's Eni issues results that show that the low oil price has hit its profits as the firm increases production.

Italy's Eni showed that the low oil price has hit its profits as it became the latest European major to issue first quarter results Wednesday. Tuesday saw BP and Total deliver mixed results from their respective upstream divisions.

Eni said that its adjusted net profit for the first quarter of this year was down 55 percent compared to 1Q 2014 at $1.7 billion. In upstream, the firm boosted its production to 1.7 million barrels of oil equivalent per day during the quarter – 7.2-percent greater than it achieved during 1Q 2014. Eni benefited from the production start up of the Hadrian South and Lucius projects in the US, the West Franklin field in the UK, the Eldfisk 2 Phase 1 development in Norway and the Nené Marine project in Congo.

Eni also highlighted near-field discoveries that it made in Egypt and Libya during the quarter and that resources discovered at its Merakes gas discovery in Indonesia have been increased.

Eni CEO Claudio Descalzi commented in a company statement:

"I am pleased with the results announced this morning. In line with our strategy, we put in place actions which recovered over EUR 600 million [$660 million] to cope with the difficult trading environment caused by the steep drop in the Brent oil price. Upstream production is increasing, and development plans supporting 2015-2016 production growth are in line with our forecasts.

"Further, all mid-downstream businesses have returned to profitability benefiting from our actions as well as the positive trading environment, thus proving the effectiveness of the upgrading initiatives implemented so far. These results, along with our focus on efficiency and working capital optimization, contributed to keeping leverage unchanged compared to December 2014, despite the Brent oil price halving."

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com


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