Eni Posts Loss of Nearly $900 Million Amid Oil Price Rout -- Update
April 29 2016 - 7:13AM
Dow Jones News
By Manuela Mesco
MILAN--Oil giant Eni SpA Friday reported a net loss of EUR792
million ($897.8 million) for this year's first quarter, a decline
from its net profit of EUR832 million during the same period last
year due to weak oil prices and a charge related to a
subsidiary.
But shares in Eni, Italy's largest company by market value,
remained stable at EUR14.35 in early trading since the company,
like other European energy producers in recent days, reported
results that weren't as dismal as some investors expected.
Eni said that fundamentals in the oil market remain weak despite
a recent rally in oil prices, presenting a gloomier picture than
some peers have offered.
"The global macroeconomic outlook for 2016 is clouded by a
number of risks and uncertainties, mainly relating to a continued
slowdown of growth in China, caution in the eurozone and in
commodity-exporting countries," the company said in a
statement.
Oil prices face "possible negative pressure" from uncertainties
over energy-demand growth in the short and medium term, the company
said.
Prices have rallied recently, soaring 76% off decade lows seen
at the beginning of this year amid hopes that slowing U.S. oil
production will help remove oversupply from the market.
While a spate of production outages in countries such as Nigeria
and Venezuela and a weaker dollar have strengthened the rally,
analysts say rising oil stocks could halt the rise, and point to a
price jump in the same period last year that fizzled out in the
second half.
In recent days, big European oil producers like BP PLC, Total SA
and Statoil ASA produced better quarterly results than some
investors forecast due to cost-cuts and support from their refining
divisions.
Total reported first-quarter profit of $1.64 billion on
Wednesday as the company slashed costs, boosted production and
benefited from resilient refining earnings. BP posted a surprise
underlying replacement-cost profit--a measure equivalent to the net
profit U.S. oil companies report--on Tuesday from
stronger-than-expected refining and trading performance. Analysts
had predicted BP would report a loss in its underlying replacement
cost profit.
Eldar Saetre, the CEO of Statoil, said the global oil market was
rebalancing while BP CEO Bob Dudley said he expected crude oil
prices to recover toward the end of the year.
Eni's adjusted operating profit, which excludes its chemicals
division Versalis--which it is in the process of selling--fell 69%
to EUR472 million in the first quarter. Analysts had expected
operating profit to fall further to EUR220 million, but
stronger-than-expected performance in the company's natural gas and
power division and resilience in other divisions helped lift
earnings.
The company's share price opened around 1% lower, but rose as
the day progressed to trade mostly unchanged on the day.
Eni reported a "messy set of results, and hard for the market to
read, but we think headlines are OK at best," said Exane BNP
Paribas analyst Aneek Haq.
Eni said it would ramp up efforts to cut costs by rescheduling
projects, being more selective about which exploration prospects it
pursues and renegotiating contracts with suppliers.
Eni's oil and gas production grew 3.4% in the quarter to 1.75
million barrels of oil equivalent a day, due to the startup of the
Goliat oil field in the Barents Sea and three other projects. The
company doesn't expect its production to grow this year compared
with 2015.
Write to Manuela Mesco at manuela.mesco@wsj.com
(END) Dow Jones Newswires
April 29, 2016 06:58 ET (10:58 GMT)
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