Gas trading boosts Eni's 3Q profit

: Crude oil, Natural gas
22/10/28

Italy's Eni said it expects to complete its current €2.4bn share buyback programme by the end of the year after an impressive financial performance in the third quarter, supported by a strong contribution from gas trading on the back of much higher prices in Europe.

Eni increased its profit to €5.86bn in July-September from €3.82bn in the second quarter and €1.2bn in the third quarter of 2021. The company's adjusted profit, which excludes inventory valuation effects and one-off items, came in at €3.73bn, beating the consensus of analysts' estimates by over €500mn.

Cash flow from operations, adjusted for working capital, improved to €5.47bn against €5.19 in the preceding quarter and €3.4bn in July-September 2021. Free cash flow for the quarter more than trebled on the year to €3.46bn, enabling Eni to cut its net debt to €11.53bn at the end of September from €12.78bn three months prior and reduce gearing, before lease liability, to 11pc from 15pc.

Eni's oil and gas production was 1.58mn b/d of oil equivalent (boe/d) in the third quarter against 1.59mn b/d over April-June and 1.69mn boe/d in July-September 2021. The company benefited from higher crude prices than a year earlier, although they were lower than the second quarter. It owed much of its strong financial performance to the Italian spot gas price, which averaged €2,082/'000m³ in July-September against €1,032/'000m³ in April-June. Gas production accounted for 55.2pc of Eni's output in the third quarter and the company sold 7.07bn m³ of gas in Italy during the period out of 13.33bn m³ of worldwide sales.

"In the quarter we further enhanced our position in the gas supply chain via our exploration activities, the upstream acquisition of BP assets in Algeria and, on the midstream side, the purchase of the Tango FLNG liquefaction vessel as part of the Congo gas valorisation project," said Eni chief executive Claudio Descalzi.

Descalzi also said the company would replace "at least 50pc" of Russian gas flows this winter using its broad base of reserves, longstanding relationships with producing countries and its growing presence in LNG.

Eni reduced its production guidance for the whole of 2022 to 1.63mn boe/d, against its prior forecast of 1.67mn boe/d, because of lower contributions from Nigeria, Kazakhstan and Norway. The firm has left its guidance for capital spending this year unchanged at €8.3bn.

By Jon Mainwaring

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25/12/19

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