San Donato Milanese, 30 July 2015 – The Board of Directors of Eni, today announces its results for the second quarter and the first half of 2015 (not audited).
Operational Highlights
- Oil and gas production: 1.754 million boe / g + 10.7% in the quarter; 1,726 million boe / d in the half 9%, organic growth records in the 2000s 1 . Excluding the impact of higher product sharing contracts + 7.1% (+ 5.2% in the first half)
- Revision guidance production full year from + 5% to over 7%;
- The start / ramp-up of fields contributed 105,000 boe / day productions the half year mainly in Angola (West Hub and Kizomba Satellites Phase 2), Congo (Nene Marine) and USA (Hadrian South and Lucius);
- Avviat or July the giant field Perla gas offshore Venezuela, with a time to market industry-leading;
- confirmed on next start the Goliat oil field in the Norwegian section of the Barents Sea;
- In semester exploratory proven resources of 300 million boe per unit cost of 1.7 $ / boe;
- Firmat the agreements in Egypt for new development projects in oil & amp; gas and revision of some oil contracts in place;
- Signature of agreements for the sale of LNG project offshore Jangkrik in Indonesia starting in 2017.
Financial Highlights
- Cas h flow from operations 2 : € 3.37 billion in the quarter (€ 5.68 billion in the first half), stable compared to 2014 despite the sharp deterioration of the scenario;
- Net financial debt at € 16.5 billion at the end of June; leverage at 0.26 (0.22 at 31 December 2014);
- Adjusted operating profit excluding Saipem: -41% in the quarter to € 1 , 50 billion (-51% to € 2.91 billion in the first half); G & amp; P, R & M and Chemicals positive in both reporting periods in 2015;
- Adjusted operating profit: -72% to € 0.76 billion in the quarter (-63% to € 2.33 billion in the first half)
- Adjusted net profit excluding Saipem: € 0.45 billion in quarter (-46%); € 1.05 billion during the period (-47%);
- Adjusted net profit: € 0.14 billion in the quarter (-84%) ; € 0.79 billion during the period (- 62%);
- Net income: – € 0.11 billion in the quarter; € 0.59 billion during the period (-70%);
- Proposal interim dividend of € 0.40 per share.
Claudio Descalzi, Chief Executive Officer, commented:
“In the first half of this year we have achieved excellent results in all the industrial business we have allowed to revise upwards some of the objectives of the strategic plan presented in March. In the upstream sector we achieved a record growth of production and we contained costs significantly. In addition, the recent start of production of the field Perla, Venezuela, and the upcoming launch of Goliath, Norway, will provide an important contribution in the second half of the year. The business of mid- downstream have all had positive results, thanks to strong progress in the restructuring of our refining and petrochemicals, to success in the renegotiation of gas contracts and to further work on the efficiency. These actions have helped to limit the effects of the fall in oil prices, both in economic terms and in terms of cash. Despite the halving of oil prices, we achieved € 5.7 billion in cash flow, in line with the first half of last year, which funded almost all of the investments made during the period. This is a particularly relevant, as we operate in an industry that today has as its main challenge the self-financing of investments. These results above expectations allow us to confirm the proposal to the Board of Directors at the upcoming 17 September of an interim dividend of € 0.40 per share. “
In same time, the Board of Directors of Eni approved the interim report as of June 30, 2015 pursuant to art. 154-ter of TUF, which was simultaneously transmitted to the external auditors. The publication of the interim report is expected in terms of law, together with the outcome of the audit.
| Second Quarter. | The trim. | Second Quarter. | Var . Second Quarter%. 15 vs 14 | RESULTS (a) | (€ millions) | The half | ||
|---|---|---|---|---|---|---|---|---|
| 2014 | 2015 | 2015 | 2014 | 2015 | Var. % | |||
| 2728 | 1567 | 762 | (72.1) | Adjusted operating profit (b) | 6219 | 2329 | (62.6) | |
| 2563 | 1,407 | 1502 | (41.4) | Adjusted operating profit without Saipem | 5926 | 2909 | (50.9) | |
| 883 | 648 | 139 | (84.3) | Adjusted net profit | 2074 | 787 | (62.1) | |
| 0.24 | 0.18 | 0 , 04 | (83.3) | – per share (€) (c) | 0.57 | 0.22 | (61.4) | |
| 0.66 | 0.41 | 0.09 | (86.4) | – for ADR ($ ) ( c) (d) | 1.56 | 0.49 | (68.6) | |
| 831 | 600 | 448 | (46.1) | Adjusted net profit without Saipem | 1981 | 1048 | (47.1) | |
| 658 | 704 | (113) | .. | Net profit | 1961 | 591 | (69.9) | |
| 0.18 | 0.20 | (0.04) | .. | – per share (€) (c) | 0.54 | 0.16 | (70.4) | |
| 0.49 | 0.45 | (0.09) | .. | – for ADR ($ ) (c) (d) | 1, 48 | 0.36 | (75.7) | |
| 636 | 769 | 214 | (66.4) | Net income without Saipem | 1913 | 983 | (48.6) | |
| 3589 | 2304 | 3374 | (6,0) | Net cash provided by operating activities | 5740 | 5678 | (1,1) | |
| (a ) Profit attributable to Eni’s shareholders. | ||||||||
| (b) For the definition and reconciliation of earnings on an adjusted basis, which excludes’ gains / losses and special items, see paragraph “Reconciliation of reported operating profit and net profit to adjusted basis’. | ||||||||
| (c) Fully diluted. The dollar amount is converted based on the average exchange rate quoted by the ECB. | ||||||||
| (d) One ADR represents two shares . | ||||||||
Adjusted operating profit
In the second quarter of 2015 Eni’s adjusted operating profit € 1.50 billion excluding the results Saipem loss of € 0.74 billion, down 41% from the second quarter of 2014 due to the decline in performance of E & amp; P (- € 1.5 billion, equal to 49%) driven by the drop of about 44% of the price of oil, the impact of which was mitigated by rising production, lower costs and the depreciation of the euro against the dollar (-19%). The reduction of the E & amp; P was partially offset by the significant improvement in the performance of R & M and Chemicals (+ € 0.36 billion) due to efficiencies and optimization combined with a recovery in margins has achieved a return to profitability .
Saipem recorded in the second quarter 2015, the adjusted loss of € 0.74 billion due to write down of work in progress and receivables in view of the weak backdrop of the oil industry.
On a consolidated basis the ‘adjusted operating profit for the quarter was € 0.76 billion, a decrease of 72% which was affected by the negative scenario effect for € 1.6 billion, partly offset by productivity growth and efficiency gains of € 0.6 billion.
In the first half of 2015, adjusted operating profit excluding Saipem (- € 0.58 billion) was € 2.91 billion, a decrease of 51% due to a decrease of 61% of the performance of the E & amp ; P (- € 3.9 billion) caused by the sharp drop in oil prices, the effects of which were partially offset by the improvement in the areas R & M and Chemicals (+ € 0.8 billion) and to a lesser extent in the sector G & amp ; P (+ € 0.07 billion).
On a consolidated basis, adjusted operating profit of the first half was € 2.33 billion, a decrease of 63%. Overall the effect on adjusted operating scenario has accounted for € 3.8 billion, partly offset by productivity growth and efficiency gains for € 0.8 billion.
Adjusted net profit
In the second quarter of 2015 adjusted net profit excluding Saipem was € 0.45 billion, a decrease of 46% compared to the second quarter of 2014 due to the decline in operating profit, the decrease in the fair value of shares of Snam and Galp (loss of € 53 million compared to income of € 99 million in the comparative period), as well as the increase in the tax rate (2 percentage points) due to lack of exploitation of the aforementioned tax charges on investments and the higher incidence of countries with higher taxation, the effects of which were partially offset by the lower share of profit before tax of the Group of the E & amp; P. On a consolidated basis, adjusted net profit for the quarter was € 0.14 billion, a decrease of 84% and a tax rate increasing to 147% due to lack of exploitation of these tax write-down of Saipem.
Adjusted net profit for the first half of 2015 to € 1.05 billion excluding Saipem decreased by 47% compared to the first half of 2014 (- € 0.93 billion). On a consolidated basis, adjusted net profit for the period was € 0.79 billion, a decrease of 62% and a tax rate increased to 83%.
Cash flow from operations
In the first half 2015, net cash flow from operating activities of € 5.68 billion and coupled with cash from divestments (€ 0.64 billion) covered most of the requirements for the payment of dividends (€ 2.02 billion) and capital expenditures (€ 6.24 billion). Net debt 3 to 30 June 2015 amounted to € 16.48 billion, an increase of € 2.79 billion over the end of 2014.
Compared to the situation 31 March 2015 , net debt increased to € 1.34 billion due to the payment of the final dividend in 2014 of Eni and investments for the period, partially offset by the net cash flow from operating activities (€ 3.37 billion), which discounts lower trade receivables sold under factoring due after the close of the reporting period as compared with 31 March 2015 (- € 0.26 billion).
The leverage 4 – ratio of net debt Net shareholders’ equity including minority interest – increased to 0.26 at June 30, 2015 compared to 0.22 at December 31, 2014, due to the increase in net debt, mitigated by the increase in total equity due to ‘positive effect (+ € 3.5 billion) of losses on foreign currency translation of financial statements of subsidiaries with the dollar as the functional currency (dollar / euro + 7.8% in the surveys of closure at the end of 2014 and 30 June 2015) . Compared to the situation on 31 March 2015, the leverage is increased by 0.04 for the reduction of foreign currency translation (- € 1.8 billion) because of the euro (+ 4%).
Interim dividend 2015
Based on the results of the first half of 2015 and forecasts for the full year, the interim dividend proposal to the Board of Directors on September 17, 2015 It will be € 0.40 per share 5 (€ 0.56 in 2014) to be paid starting from 23 September 2015, with record date September 21, 2015.
1 ) With the exception of the second half of 2012 for the resumption of Libyan production.
2) Net cash flow from operating activities.
3) Information on net borrowings composition is furnished on page. 33.
4) In this press release are accompanied by explanatory notes and meaning of the alternative performance indicators in line with the CESR / 05-178b. For the definition of these alternative performance indicators v. p. 33.
5) Dividends no longer attract any tax credit and, depending on the receiver, is subject to withholding tax as tax on distribution or are partially added to the taxable income.
| Second Quarter. | The trim. | Second Quarter. | Var.% Second Quarter. 15 vs 14 | The half | ||||
|---|---|---|---|---|---|---|---|---|
| 2014 | 2015 | 2015 | KEY OPERATING | 2014 | 2015 | Var. % | ||
| 1584 | 1697 | 1754 | 10.7 | Production of hydrocarbons | (thousand boe / day) | 1,583 | 1,726 | 9.0 |
| 813 | 860 | 903 | 11.1 | – Oil | (thousands of barrels / day ) | 817 | 882 | 8.0 |
| 120 | 130 | 132 | 10.0 | – Natural gas | (million cubic meters / day) | 119 | 131 | 10.1 |
| 19.09 | 25.62 | 22.39 | 17.3 | Sales worldwide gas | (bcm) | 45.85 | 48.01 | 4.7 |
| 7.75 | 8.47 | 8.35 | 7.7 | Electricity sales | (TWh) | 16.00 | 16.82 | 5, 1 |
| 2.38 | 2.04 | 2.29 | (3,8) | Sales of products Petroleum Network Europe | (million tons) | 4.54 | 4.33 | (4,6) |
| 1.36 | 1.43 | 1.33 | (2,4) | Production petrochemicals | (million tons) | 2.80 | 2.76 | (1.6) |
Exploration & amp; Production
The production of hydrocarbons in the second quarter of 2015 was 1.754 million boe / d, an increase of 10.7% (1.726 million boe / d in the first half; + 9%). Excluding the price effect on PSAs, production recorded an increase of 7.1% (+ 5.2% in the first half) due to the contribution of new start and ramp-up of fields started at the end of 2014 mainly in Angola, Congo, the United States, Egypt and the United Kingdom and to higher production in Libya. These increases were partially offset by declines of mature.
Gas & amp; Power
In the second quarter 2015 natural gas sales were $ 22.39 billion cubic meters, up 3.30 billion cubic meters (+ 17.3%) compared to the second quarter 2014. Sales in Italy increased by 45.5% to 10.58 billion cubic meters due to higher sales hub (PSV) and higher volumes sold in the civil segment due to climate, partially offset by a decline in sales to wholesalers and thermoelectric. Sales in the European markets of 8.37 billion cubic meters were down by 7.1%, mainly in Germany as a result of the divestment of the stake in GVS in 2014, and in the Benelux due to lower sales to wholesalers. Considering the first half, the comparison between 2015 and 2014 recorded an overall growth of Eni’s by 4.7% to 48.01 billion cubic meters.
Refining & amp; Marketing
In the second quarter of 2015, the margin indicator Eni (Eni Refining Margin Standard – SERM) has quadrupled in value in relation to the particularly depressed in the second quarter 2014 due to the fall in the price of Brent and of ‘appreciation of gasoline in a context of non-availability of production facilities for maintenance stops. But that still leaves the structural weaknesses of the European refining industry linked to weak demand, overcapacity and the competitive pressure from refiners of Russia, Asia and the United States with more efficient cost structures. Sales of petroleum products in the markets in Italy were 1.50 million tons in the second quarter, showing a decrease of 6.2% mainly due to the strong competitive pressure. The market share was 24.3% in the second quarter 2015, a decrease of 1.9 percentage points over the same period last year (26.2%). Retail sales in the rest of Europe in the second quarter 2015 were essentially stable.
Chemistry
The Chemicals benefited from restructuring and conversion of the business carried out in prior years and the improved margins of commodity (in particular the chain ethylene-polyethylene-styrene) incurred by the temporary shortage of product due to unplanned downtime of equipment, from a recovery in domestic demand and the depreciation of the euro that has made less competitive imports.
Change euro / dollar
The results of the second quarter and first half of 2015 benefited from the depreciation of the euro against the dollar ( -19.4% and -18.5% respectively in the two periods of comparison).
Develop business
At the beginning of July was started the giant field Perla gas offshore Venezuela, one of the most significant start-up in 2015 for Eni. The oil field operated by a joint venture with Repsol has been developed with a time-to-market of only five years, a time that ranks among the best in the industry through the use of prefabricated modules for the construction of treatment plants in ground, to minimize the construction work.
Pearl has a potential of 480 billion cubic meters of gas in place (3.1 billion barrels of oil equivalent) and full field plateau was planned in three phases for reduce and dilute investments: Phase 1 ( Early Production ) has a plateau production of about 13 million cubic meters / day (approximately 40,000 boe / day net to Eni) increased from 8.4 million cubic meters / day initially planned, the Phase 2 provides a plateau of about 23 million cubic meters / day by 2017 (approximately 73,000 boe / day net to Eni) and Phase 3 a final plateau of about 34 million cubic meters / day in 2020 (corresponding to approximately 110 kboe / d net to Eni).
The development of the field has been made possible by the signing of the Gas Sales Agreement with PDVSA for the three phases production until 2036. The gas will be used mainly by PDVSA in the domestic market.
It ‘been finalized an agreement with KazMunayGas for transfer to Eni of 50% of the rights of exploitation of the subsoil for research and production of hydrocarbons in block Isatay, located in the Kazakh waters of the Caspian Sea. The block, which is estimated to have a significant mining potential, will be managed by a joint operating company between Eni and KMG. Eni will provide the venture its proprietary technologies. The closing will take place in the coming months with the approval of the transaction by the Republic of Kazakhstan.
have been signed between the partners in the project development of Jangkrik gas discovery (Eni 55%, operator) and PT Pertamina two agreements for the sale of LNG to be produced from the field to a total volume of 1.4 million tons / year starting in 2017. These agreements are an important step forward for the finalization of the development Jangkrik, which represents one of the first gas projects in deep water in Indonesia developed a pattern of accelerated execution.
In Ghana, with the ratification by the competent authority, it was awarded the final investment decision for the development of the integrated project to Oil and gas OCTP (Eni operator, 47.22%). First oil is expected in 2017; the first gas in 2018. Peak production of 80,000 boe / day is expected for 2019.
In Egypt was signed with the competent authorities of the country an oil deal that provides for investments of $ 5 billion ( 100%) in the coming years aimed at the implementation of development projects of oil and gas reserves in order to exploit the potential local mining. In this area it was set out with counterparties changing some parameters and terms of existing oil contracts, whose economic effects are retroactive to January 1, 2015 were recognized in the accounts at June 30, 2015. The agreement includes the development of new forms of Recovery of overdue trade receivables owed by Eni supplies of hydrocarbons against state companies.
were also awarded three Concession Agreement to operate in the block in the Western Desert Southwest Melehia and blocks Karawan and North Leil offshore Mediterranean.
In Myanmar, following the participation in the International Competitive Bid, have been awarded two Production Sharing Contract (PSC) for the exploration of two offshore blocks MD-02 and MD-04.
In Norway have been awarded following competitive bid two exploration licenses: (i) the operatorship of PL 806 with a share of 40% in the Barents Sea; and (ii) the PL 044C with a share of 13.12% in the North Sea.
In the United Kingdom were granted four exploration licenses located in the Central North Sea and was completed the acquisition of three licenses in the southern North Sea.
In Angola has obtained an extension of three years of the exploration period the Block 15/06 where it was launched in late 2014, the West Hub project work.
Discoveries ‘near-field’: i) oil discoveries in Egypt and gas concession in Melehia with the well Melehia West Deep in the Western Desert and gas exploration prospect in Nooros, the license of Abu Madi West, Nile Delta; ii) in Libya finds gas and condensate in the contract area offshore D involving the exploration prospect Bouri and Bahr Essalam North South, both times in the vicinity of producing fields; iii) in Indonesia the assessment activities Merakes gas discovery in the deep offshore Block East Sepinngan (Eni operator, 85%), made it possible to significantly increase the volume estimates of gas in place. Evaluates the possibility of accelerated development of the discovery to maximize synergies with the nearby offshore field Jangkrik, also operated by Eni.
In the period included the following production startups:
(the ) Kizomba Satellite Phase 2, in block 15, offshore Angola, with a total of about 190 million barrels of oil recoverable reserves and an expected peak production of 70,000 barrels / day;
(ii) Cinguvu as part of the West Hub Development in Block 15/06 in Angola that includes the development of several discoveries modular block to support the production plateau. The field Cinguvu is the second to go into production after Sangos started in 2014. The two fields produce about 60,000 barrels / day;
(iii) Nene in Congo in Block Marine XII, just eight months upon obtaining the residence production at an initial level of 7,500 boe / day by leveraging synergies with the front-end loading and infrastructure of the deposits of the area. The complete development of Nene will happen in stages and involves the installation of production platforms and the drilling of 30 wells, with a plateau estimated at more than 120,000 barrels / day;
(iv) in the Gulf of Hadrian South Mexico with a daily production estimated at 10 million cubic meters of gas and 2,250 barrels of liquid hydrocarbons (approximately 16,000 boe / day net to Eni) and field Lucius with an estimated daily production of about 7,000 boe net to Eni;
(v) West Franklin Phase 2 in the UK and Eldfisk 2 phase 1 in Norway.
Offer to repurchase the convertible bond into shares Galp Energia
As part of its offering of € 1.028.100.000 maturing in 2015, convertible into ordinary shares of Galp Energia SGPS SA, Eni, as issuer, has accepted the offer of sale by the holders of the bonds for a nominal amount total of € 514.9 million in exchange for payment in cash. The operation was performed on the basis of a competitive auction process. The purchase price of the bonds validly tendered was set at € 100 400 for each € 100,000 nominal value of the bonds. The settlement date was June 4, 2015. Eni paid, in addition to the purchase price, interest accrued and not paid until the settlement date. Bonds repurchased by Eni will be deleted in accordance with related regulations, while bonds that have not been offered for sale and / or repurchased will remain outstanding and subject to its regulation.
Versalis
signed a technological cooperation agreement with EVE Ecombine and Rubber Institute for the development of an innovative integrated technology platform that aims to market a new range of elastomeric materials with high mechanical performance and low environmental impact.
signed an agreement with the Indian company Reliance Industries Ltd for the marketing of styrene-butadiene rubber.
Corporate Social Responsibility
In May 2015 was awarded to the Eni ” Corporate Social Responsibility Award ‘for its contribution to sustainable development in the territory in which they operate and in corporate social responsibility. The values that have distinguished Eni included the promotion of human resources, environmental protection, community development, culture and technological innovation.
Eni and the Politecnico di Milano have renewed until 2018 collaboration agreement aimed at supporting, in accordance with criteria of economic, environmental and social innovations border processes and technologies in the oil & amp; gas.
Outlook
The outlook for 2015 is characterized by moderate strengthening of global economic growth led by the United States. Remain risks to the strength of the recovery in the euro area, the extent of the slowdown in China and other emerging economies and financial stability.
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