Eni Sticks To Targets After Worse Than Forecast Loss
By Stephen Jewkes
Oct 28 Italian oil major Eni reported a bigger-than-expected net loss in the third quarter but stuck to its growth targets encouraged by production prospects and disposals.
The group’s adjusted net loss in the quarter widened to 484 million euros ($528 million) from a previous 127 million euro loss as low oil prices and production shutdowns in Italy and Norway took their toll.
The result fell short of a forecast from analysts, provided by the company, for a loss of 70 million euros.
Commitments by OPEC last month to restrain output to boost prices have helped buoy sentiment in the industry but oil companies are still feeling the impact of a fall in crude prices of more than 50 percent since mid-2014.
At 1233 GMT Eni shares were down 3.13 percent while the European sector was down 1 percent.
Despite the loss, Eni said it expected new fields and ramp ups, including the giant Kashagan oilfield in Kazakhstan, to add another 280,000 barrels per day this year.
Confirming it would cut investments this year by 20 percent, the group said it expected oil and gas output for the year to be substantially in line with 2015.
Analysts said the final quarter of the year would also be helped by resumption of production at the key fields of Val d’Agri in Italy and Goliat in Norway.
In a note to clients, Mediobanca said despite the third quarter results Eni was a must-have for long-term investors because of its upstream oil and gas portfolio.
“We also believe a potential sell down of its key assets in Egypt and Mozambique should underpin its share price near term, as it should allow the group to maintain the current dividend pay-out in 2017-2018.”
Eni, whose cash flow fell 19 percent in the quarter, is committed to selling 5 billion euros of assets in the next two years, including stakes in its Area 4 field in Mozambique and its Zohr field in Egypt.
Sources have said Exxon Mobil has already clinched a deal to buy a stake in Area 4.
“Maybe we will have some news update (on asset sales) in the next few months,” CFO Massimo Mondazzi said in a conference call. ($1 = 0.9173 euros) (Editing by Alexander Smith/Ruth Pitchford)