Eni Profit Declines Amid Weak Demand, Volatile Libya

(RTTNews) - Italian oil and gas company Eni SpA (E) Tuesday said first-quarter profit declined nearly 16 percent from last year, as revenues declined amid volatility in Libya and weak demand in Europe.

Paolo Scaroni, CEO, said, "Eni delivered solid results in the first quarter 2014, despite a difficult market environment, thanks to a good performance in E&P and progress in the mid and downstream businesses, in particular with the renegotiation of the Statoil gas supply contract.''

Net profit attributable to shareholders dropped 15.6 percent to 1.30 billion euros ($1.8 billion) from 1.54 billion euros in the first quarter 2013.

Adjusted net profit attributable to shareholders declined 14.3 percent to 1.19 billion euros, driven by a lower operating performance and an increased adjusted consolidated tax rate due mainly to the Exploration & Production Division. A growing share of taxable profit was earned by subsidiaries that had a higher tax rate.

Net sales from operations fell 6.3 percent to 29.20 billion euros from 31.17 billion euros. Total revenues slipped to 29.36 billion euros from 31.41 billion euros.

Eni's liquids and gas production was 1.583 million barrels of oil equivalent per day or boe/d for the quarter, down 1.1 percent from last year.

On a homogeneous basis, excluding the effects of the assets disposal in Siberia, production edged up 0.6 percent due to production ramp-ups mainly in the U.K. and Algeria, partially offset by continuing political instability in Libya and mature fields declines.

Eni's natural gas sales decreased 11.3 percent to 26.76 bcm, due to continuing weakness in demand, competitive pressure and oversupplies as well as unusual weather conditions.

During the period, European refining margins were at depressed levels, driven by overcapacity, lower demand and increasing competitive pressure from import streams of refined products from Russia, Middle East and the U.S.

Furthermore, Eni's refining margins were affected by narrowing differentials between the heavy crudes processed by its refineries and the marker Brent.

In Refining & Marketing, retail sales in Italy decreased over 12 percent to 1.45 mmtonnes, amid reduced domestic consumption and increasing competitive pressure. Eni's retail market share decreased 2.9 percentage points to 26.2 percent.

For 2014, production of liquids and natural gas is expected to remain substantially in line with 2013, excluding the impact of the divestment of Eni's interest in the Artic Russia gas assets.

Scaroni added that the outlook for 2014 is in line with expectations, benefiting from the ramp-up of new projects and restructuring activities in G&P, R&M and Chemicals, in the context of continued volatility in Libya and weakness in European demand. The stock is up 1.8 percent in Milan in early morning trading at 18.65 euros.