Eni SPA reported a first-quarter consolidated adjusted operating profit of €1.57 billion, down 55% from first-quarter 2014. The company says the decline was driven by lower crude oil prices, and only partly offset by a better performance recorded in upstream activity and in all other business segments.
Adjusted net profit of €650 million was down 45.6% from first-quarter 2014 due to lower operating profits, which was down €1.92 billion. The group’s adjusted tax rate decreased 6%, reflecting a lower share of taxable profit reported by the E&P segment and interest gains that are nontaxable items.
Cash flow from operating activities for the quarter was €2.3 billion. Divestment proceeds of €550 million funded most of the capital expenditure incurred in the quarter of €2.9 billion, mainly directed to exploration and development of oil and gas resources.
"In line with our strategy, we put in place actions which recovered over €600 million to cope with the difficult trading environment caused by the steep drop in the Brent oil price," explained Claudio Descalzi, Eni chief executive officer.
Eni’s hydrocarbon production totaled 1.7 million boe/d, an increase of 7.2% year-over-year facilitated by field startups, higher production in Libya, and continuing production ramp-up in Angola, Congo, Egypt, and the US. These increases were partially offset by declines from mature fields.
"Upstream production is increasing, and development plans supporting 2015-16 production growth are in line with our forecasts," Descalzi said.
Standard Eni Refining Margin (SERM) during the quarter increased sixfold from first-quarter 2014, which the company attributes to a fall in crude oil feedstock prices. However, the European refining business continued to be affected by structural headwinds from lower demand, overcapacity, and increasing competitive pressure from streams of oil products imported with more efficient cost structures from Russia, Asia, and the US.
The R&M and chemicals segment reported an adjusted operating profit of €120 million, compared with an operating loss of €310 million in first-quarter 2014, reflecting a recovery in margins of oil products and chemical commodities, as well as efficiency and optimization initiatives.
Oil field services subsidiary Saipem SPA reported an increase in operating profit of 25%.
"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," said Descalzi.