ENI ASSUMES GRADUAL GLOBAL RECOVERY IN CONSUMPTION OF OIL AND GAS
Italian giant ENI reported quarterly results affected by the combined impact of an ongoing economic recession due to the COVID-19 and falling energy prices:
• Adjusted operating profit: €1.31 billion, down by €1 billion, or by 44%, compared to the first quarter of 2019.
• Adjusted net profit at €59 million.
• Net result: net loss of €2.93 billion (net profit of €1.1 billion in the first quarter of 2019) mainly due to the alignment of the book value of inventories to market prices current at the end of the quarter.
• Net investments: €1.9 billion, fully funded through cash flow provided by operating activities before working capital effects.
Having examined the results, Eni CEO Claudio Descalzi said:
“The period since March has been the most complex period the global economy has seen for more than 70 years. For the energy industry, and in particular for Oil&Gas, the complexity is even greater given the overlap of the effects of the pandemic with the collapse in oil prices. Eni is tackling this period by relying on a safe operating organisation for its employees, contractors, and the populations of its host countries. Furthermore, Eni’s people have shown an incredible capacity and willingness to adapt to the difficult circumstances at the moment, allowing the Group to operate with full continuity. The business portfolio is more resilient than ever before, while the capital structure is very solid thanks to actions taken in recent years. The balance sheet is robust and above all shows €16 billion of cash on hand, which will allow the Group to manage the drop in business due to prices and the pandemic. Like everyone, we expect a complicated 2020, but thanks to our strengths we are sure we can swiftly resume our journey towards an even more profitable and sustainable future, as set out in our latest strategic plan.”
In response to the crisis, the company plans a capex curtailments of approximately €2.3 billion for 2020, 30% lower than the initial capital budget, and anticipated further reductions of €2.5-3 billion in 2021, i.e. 30%-35% lower than original plans.
Eni said the company is well equipped to withstand the downturn leveraging the resilience of its portfolio of conventional oil and gas properties with low break-even prices and a robust financial position.
Eni assumes a gradual recovery in global consumption of oil, natural gas and power in the second half of the year, particularly in Eni’s reference markets.
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