Eni Q3 Profit Climbs On Gain, Despite Lower Sales - Update

(RTTNews) - Italian oil and gas company Eni SpA (E) reported Wednesday a surge in third-quarter profit, mainly benefited by a hefty divestment gain. Meanwhile, net sales declined on lower production and sales. For fiscal 2013, the company backed its forecast for lower production and sales.

Chief Executive Officer Paolo Scaroni said, "These operating successes strengthen our profitability outlook against the backdrop of a quarter that has not only been affected by difficult market conditions in the European markets of mid and downstream, but also by the extraordinary reductions of production in Nigeria and Libya, and by the appreciation of the euro."

For the third quarter, net profit attributable to shareholders from continuing operations rose 61.9 percent to 3.99 billion euros from the previous year's 2.46 billion euros.

Net profit per share improved 61.8 percent to 1.10 euros from 0.68 euros last year. On American Depository share basis, earnings grew 71.2 percent to $2.91 per ADR from last year's $1.70 per ADR.

The latest quarter results included recognized net consideration and net gain of 3 billion euros on the divestment to CNPC of the 28.57 percent interest in Eni East Africa, owner of the mineral rights in Area 4 in Mozambique. This positive was partly offset by a decrease in operating performance and other changes.

Adjusted net profit was 1.17 billion euros, compared to last year's 1.78 billion euros. Adjusted earnings per share was 0.32 euro or $0.85 per ADR.

The company attributed the earnings results to a reduced operating performance, lower income from interests in industrial joint ventures and an increase of approximately 10 percentage points in the Group adjusted tax rate.

Net sales from continuing operations for the quarter declined 6.6 percent to 29.42 billion euros from 31.49 billion euros in the year ago quarter.

Eni's liquids and gas production of 1.653 million barrels of oil equivalent per day or mmboe/d declined 3.8 percent from last year as significant force majeure events in Nigeria and in Libya reduced production by approximately 50 kboe/d.

Eni's worldwide natural gas sales declined 5.8 percent to 18.35 bcm, mainly due to the use of the higher flexibility obtained from the renegotiation of long-term supply contracts.

Looking ahead, for fiscal 2013, Eni continues to project production of liquids and natural gas to be lower from last year due to the impact of geopolitical factors, in particular in Nigeria and Libya. Natural gas sales for 2013 are expected to decrease from last year's sales of 95.32 bcm mainly due to the divestment of Galp. Retail sales volumes also would be lower reflecting an expected contraction in domestic demand and increasing competitive pressure.

In 2013, the company expects a capital budget broadly in line with 2012. The company had 12.76 billion euros in capital expenditure and 0.57 billion euros in financial investments in 2012, excluding Snam investments.

Eni shares are currently trading at 18.76 euros, up 0.65 euros or 3.59 percent.