Page 9 - Euroil Week 43 2019

EurOil PERFORMANCE EurOil
Eni stung by low prices in Q3, despite output gains
ITALY
Growth came from the Zohr gas field off Egypt and other new projects.
THE net profits of Italy’s Eni slumped by two thirds to €523mn ($580mn) in the third quarter, as low oil and gas prices took their toll on the company’s performance.
The part government-owned producer posted a net profit of €1.53bn euros in the third quarter of 2018. It cited a 18% drop in crude oil prices, and a 50% fall in European gas prices, as factors behind its much weaker earnings in the same period of this year.
Adjusted operating profit slumped by 35% to€2.16bn,drivenbya31%declineinupstream income to €2.14bn. Income from gas and power operations increased by 31% to €93mn, while earnings from refining and chemicals rose 56% to €145mn. Overall adjusted net profit tumbled 44% year on year to €776mn.
Besides weaker prices, Eni’s upstream per- formance was also stung by the loss of revenues from its former Norwegian unit Eni Norge, which merged last year with Point Resources to create Var Energi.
Bearish market conditions more than offset a 4.7% y/y increase in oil and gas production to 1.8mn barrels of oil equivalent per day (boepd) – Eni’s highest ever third-quarter result – on the back of growth at the Zohr gas field off Egypt in
late 2017. Output was up 6% quarter on quarter, with this trend set to continue thanks to a further ramp-up at Zohr.
Zohr and a range of other new projects across the world are set to add a total of 250,000 boepd to Eni’s output this year. The company also said its recently agreed $4.5bn purchase of ExxonMobil’s interests in over 20 producing oil and gas fields in Norway, as well as acquisition of a 20% stake in the Ruwais refinery in the UAE, would provide “a further boost to growth and stability”.
While net cash before changes in working capital at replacement cost slumped 23% y/y in the third quarter to €2.6bn, it still grew 5% to €9.4bn in the first nine months of the year. According to CEO Claudio Descalzi, this is more than enough cash for the company to cover its €5.6bn in net investments in the period and its planned dividend and buy-back for the full year, projected at €3.4bn.
“This shows that Eni’s efficient portfolio can achieve breakeven at prices well below current difficult conditions,” he said in a statement.
Eni projects its full-year capital expenditure to be slightly below its previous guidance of €8bn. ™
POLICY
Israel grants licences following disappointing bid round
ISRAEL
Cairn Energy and Energean were among those that did secure licences.
ISRAEL this week awarded offshore exploration licences to two consortia as part of its much- hyped and equally disappointing latest licensing round.
The first group of companies, which is made up of UK-based Cairn Energy and Pharos Energy alongside local firm Ratio Oil Explora- tion, was awarded eight licences, with the second consortium, comprising Energean and Israel Opportunity, winning four. Pharos Energy is the new name for Soco International.
The parties won each of the 12 blocks they bid for out of a possible 19, with each licence cover- ing 400 square km.
The deadline for bidding was pushed back from June 17 to July 15 amid apparent con- cerns about a lack of interest. At the time, the
Petroleum Commissioner said the delay had come about to give bidders “more time to com- plete their assessments”, expressing satisfac- tion with the interest shown by participating companies.
Winning bids from the round were originally scheduled to be announced on August 12.
The acreage was divided into five “clusters” as part of efforts to encourage a single company or consortium to acquire multiple contiguous licences.
The $2.5mn “basic participation guarantee” paid for the first block falls to $500,000 for each additional block purchased within the grouping.
Licences will have an initial duration of three years, which will be extendable by two years on condition of a commitment to drill at least one
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