Eni takes second-quarter loss amid Val d’Agri shutdown

Eni SPA posted a second-quarter adjusted net loss of €290 million compared with an adjusted net profit of €505 million in second-quarter 2015. For the first half, the firm took an adjusted net loss of €267 million compared with an adjusted net profit of €1.23 billion in first-half 2015.

Eni attributes the losses to lower commodity prices and the second-quarter oil production shutdown at Val d’Agri field in the Southern Apennines, occurring after Italian authorities seized certain plants and facilities amid alleged environmental crimes. The shutdown has affected about 60,000 boe/d net to Eni.

On June 1, Italian authorities granted Eni a temporary repeal of the seizure to allow the firm to perform certain plant upgrading intended to address claims made by the public prosecutor. Eni has since completed the plant upgrade. Once the public prosecutor verifies the upgrade, it’s expected to repeal the seizure.

As a result, companywide hydrocarbon production fell 2.2% during the second quarter. During the first half, an average of 1.734 million boe/d was up 0.5% year-over-year. Eni says confirmed schedules and costs of ongoing development projects will bolster future production growth by more than 5% in 2017.

During the rest of the year, the firm expects stable year-over-year production due to planned ramp-ups and start-ups of new fields, primarily in Norway, Egypt, Angola, Venezuela, and Congo (Brazzaville). Those increases will absorb the 4-month production shutdown in Val d’Agri, mature field decline, and a lower expected contribution from production one-offs.

“Hydrocarbon production beat expectations, offsetting the suspension of activity in Val d’Agri and the disruptions in Nigeria,” commented Claudio Descalzi, Eni chief executive officer. “Our exploration, which is focused on near-field activity, has allowed us to revise upwards our expectations for…discoveries in just 6 months.”

Descalzi says the company is capable of funding capital expenditures with cash flow at a Brent crude oil price of $50/bbl. The firm maintains plans to reduce 2016 capital spending by 20% year-over-year.

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