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ENI returns to profit, Descalzi promises value

Rome - ENI is in the black again after two years of negative balance sheets,setting a production record and starting a strong trend which, if the market allows it, could also permit shareholder remuneration to improve. This is the summary of the 2017 accounts released by the Petroleum Group

Rome - ENI is in the black again after two years of negative balance sheets, setting a production record and starting a strong trend which, if the market allows it, could also permit shareholder remuneration to improve. This is the summary of the 2017 accounts released by the Petroleum Group, results that CEO Claudio Descalzi describes as “excellent” and which the Stock Exchange clearly appreciated, as it rewarded the stock with an increase of 0.95% to €13.632. After closing 2015 and 2016 at a loss, thanks also to the recovery in the price of crude oil, 2017 ended with a net profit of €3.43 billion and an adjusted net profit of €2.4 billion.

The fourth quarter was particularly positive, with ENI achieving a net profit of €2.1 billion, while adjusted net profit reached €0.98 billion, more than double the results for the same period in 2016 (€460 million) and exceeding market expectations. The “Exploration and Production” sector performed very well, not only because of the double record for production in December at 1.92 million barrels and the average annual production at 1.82 million (+3.2%), which were achieved despite the cut in investments, but most importantly because of capital gains deriving from the sale of 40% of the Zohr Field in Egypt (1.2 billion) and 25% in the Mozambique offshore (almost two billion).

The strategy that calls for the identification of deposits and the sale of shares is therefore continuing to bear fruit: financial director Massimo Mondazzi explained that further divestments could now take place in “Mexico, Indonesia and other areas”. However, the performance of all its businesses was positive: gas reached operating profit one year ahead of schedule, refining achieved record operating results for the last eight years, and the chemical industries achieved their best operating performance ever.

A healthy framework, therefore, that fully satisfies Descalzi: “We closed 2017 with excellent results”, said the Managing Director, adding that “growth prospects for the future are excellent in all our businesses and will be pursued with financial discipline and great attention to their sustainability in the face of even more difficult scenarios. That means that, if market conditions are more favourable, we will be able to generate enormous extra value for our shareholders.” Not a word more, however, about possible increases in the dividend (confirmed at €0.80), reduced in 2015 with a painful manoeuvre that was necessary to counter the collapse of crude oil prices: any decisions on this matter were in fact postponed until 16 March, when the company will present its new strategic plan for 2018-2020 to the market.

The only hints about 2018 were estimated production growth (+3%), investments amounting to €8 billion, adjusted operating income of €0.3 billion in the gas sector and a breakeven margin of approximately 3 dollars per barrel for refining. For all the rest, investors will have to “be patient”, Descalzi said on the conference call.

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