Img_oil_Our_channel.jpg
enioilproducts

Your business, our energy

Products and solutions for business and customers Italy and abroad

Img_enispace_Our_channel.png
ENISPACE

Working and growing together

The platform dedicated to Eni's current and future suppliers

PRICE SENSITIVE
Financial news, results and Strategic Plan

Eni: second quarter and first half of 2015 results

30 July 2015 - 7:45 AM CEST
 

Operational highlights

  • Hydrocarbon production: 1.754 million boe/d in the quarter, up 10.7%; 1.726 million boe/d in the first half, up 9%, record organic growth since 20001. Excluding positive price effects, production increased 7.1% (up 5.2% in the first half);
  • Increased guidance for full-year production growth from 5% to over 7%;
  • New fields start-ups and ramp-ups added 105 kboe/d to first half production, mainly in Angola (West Hub and Kizomba Satellites Phase 2), Congo (Nené Marine) and in the United States (Hadrian South and Lucius);
  • Perla, the giant offshore gas field in Venezuela, started up in July, with industry leading time-to-market;
  • The Goliat offshore oilfield in Norway’s Barents Sea is next to achieve start-up;
  • The resource base increased by 300 million boe in the first half, at an average cost of 1.71$/boe;
  • Signed agreements for the development of new oil&gas projects in Egypt and the revision of current petroleum contracts;
  • Signed LNG sale agreements for the development of the Jangkrik offshore project in Indonesia, expected to start-up in 2017.

 

Financial highlights

  • Cash flow2: €3.37 billion for the quarter (€5.68 billion in the first half), stable compared to 2014 in spite of the sharply lower oil prices;
  • Net borrowings: €16.5 billion at the end of June; leverage at 0.26 (0.22 at the end of 2014);
  • Adjusted operating profit excluding Saipem: down 41% at €1.50 billion for the quarter (down 51% at €2.91 billion for the first half); G&P, R&M and Chemical were profitable in both 2015 reporting periods;
  • Adjusted operating profit: down 72% at €0.76 billion for the quarter (down 63% at €2.33 billion for the first half);
  • Adjusted net profit excluding Saipem: €0.45 billion for the quarter, down 46%; €1.05 billion for the first half, down 47%;
  • Adjusted net profit: €0.14 billion for the quarter, down 84%; €0.79 billion for the first half, down 62%;
  • Net profit: down €0.11 billion for the quarter; €0.59 billion for the first half, down 70%;
  • Dividend proposal of €0.40 per share.

Claudio Descalzi, Chief Executive Officer, commented:
"In the first half of the year we have achieved excellent industrial results across our businesses, which enable us to revise upwards several of the targets set out in the strategic plan presented in March. In upstream we delivered record production growth and we have significantly contained costs. Furthermore, the recent start-up of production in the Perla field in Venezuela, and forthcoming start-up of Goliat in Norway will provide an important contribution in the second half. The mid-downstream businesses all reached profitability, thanks to the strong progress we have made in restructuring our refineries and petrochemical plants, successful renegotiations of gas contracts and further interventions on efficiency. These actions have helped to contain the impact of the fall in hydrocarbons prices, both in terms of economics and cash generation. Despite the halving of oil prices, we have generated €5.7 billion of cash flow, in line with the first half of 2014, which has financed almost all capital investment in the half year. This is a very significant result, given that self-financing investment is the main challenge facing the sector today. These better than expected results enable me to confirm the proposal of an interim dividend of €0.40 per share to the Board of Directors, on September 17".

At the same time as reviewing this press release, the Board has approved the interim consolidated report as of June 30, 2015, which has been prepared in accordance to Italian listing standards as per article 154-ter of the Code for securities and exchanges (Testo Unico della Finanza). The document was immediately submitted to the Company’s external auditor. Publication of the interim consolidated report is scheduled within the terms of law alongside completion of the auditor’s review.

Financial highlights
Second Quarter First Quarter Second Quarter % Ch.
II Q.15
vs. II Q.14
SUMMARY GROUP RESULTS (a)       (€ million)First Half 
201420152015  20142015% Ch.
2,7281,567762(72.1)

Adjusted operating profit (b)

 6,2192,329(62.6)
2,5631,4071,502(41.4)

Adjusted operating profit excluding Saipem

5,9262,909(50.9)
883648139(84.3)

Adjusted net profit

 2,074787(62.1)
0.240.180.04(83.3)

- per share (€) (c)

 0.570.22(61.4)
0.660.410.09(86.4)

- per ADR ($) (c) (d)

 1.560.49(68.6)
831600448(46.1)

Adjusted net profit excluding Saipem

1,9811,048(47.1)
658704(113)..

Net profit 

 1,961591(69.9)
0.180.20(0.04)..

- per share (€) (c)

 0.540.16(70.4)
0.490.45(0.09)..

- per ADR ($) (c) (d)

 1.480.36(75.7)
636769214(66.4)

Net profit excluding Saipem

 1,913983(48.6)
3,5892,3043,374(6.0)

Net cash provided by operating activities

5,7405,678(1.1)

(a) Attributable to Eni's shareholders.

(b) For a detailed explanation of adjusted operating profit and net profit see paragraph “Reconciliation of reported operating and net profit to results on an adjusted basis".

(c) Fully diluted. Dollar amounts are converted on the basis of the average EUR/USD exchange rate quoted by the ECB for the periods presented.

(d) One ADR (American Depositary Receipt) is equal to two Eni ordinary shares.

Adjusted operating profit
In the second quarter of 2015, Eni reported adjusted consolidated operating profit excluding Saipem (which reported a loss of €0.74 billion) of €1.50 billion, down by 41% from the second quarter of 2014. This was due to a lower performance of the Exploration & Production segment (down by €1.5 billion, or 49%) driven by sharply lower oil prices (down by approximately 44%), partly offset by production growth, cost efficiencies and the depreciation of the euro against the dollar (down by 19%). The lower E&P result was partially offset by the significant improvement in Refining & Marketing and Chemicals (up by €0.36 billion), with the combination of efficiency and optimization gains and ongoing margin recovery supporting a return to profitability in the segment.

Saipem reported an adjusted operating loss of €0.74 billion following write-downs of pending revenues and trade receivables, due to the weak oil price environment.
Group consolidated adjusted operating profit for the second quarter of 2015 was €0.76 billion, a decrease of 72%, driven by the negative impact of the scenario for €1.6 billion, partly offset by production growth and efficiency gains for €0.6 billion.

In the first half of 2015, Eni reported adjusted consolidated operating profit excluding Saipem (down €0.58 billion) of €2.91 billion, down by 51%. The reduction was driven by a 61% decline in Exploration & Production (down by €3.9 billion), impacted by sharply lower oil prices, and partly offset by improved results in Refining & Marketing and Chemicals (up by €0.8 billion) and, to a lesser extent, Gas & Power (up by €0.07 billion).

Group consolidated adjusted operating profit for the first half of 2015 was €2.33 billion, decreasing by 63%, driven by the negative impact of the scenario for €3.8 billion, partly offset by production growth and efficiency gains for €0.8 billion.

Adjusted net profit
In the second quarter of 2015, adjusted net profit excluding Saipem was €0.45 billion, declining by 46% from the second quarter of 2014. The reduction was driven by lower operating profit and a loss recorded from fair-valued interests in Snam and Galp (down by €53 million compared to a gain of €99 million in the year-ago quarter). Another driver was the Group’s higher adjusted tax rate, which increased by approximately 2 percentage points. This was due to the aforementioned interest losses, which are non-taxable items, and because of the greater contribution to taxable profit of subsidiaries in countries with higher rates of taxes. These effects were partly offset by the lower contribution of the Exploration & Production segment to Group profit before tax.

Group consolidated adjusted net profit for the second quarter of 2015 was €0.14 billion, decreasing by 84%; tax rate increased to 147% reflecting the non-taxable write-downs of Saipem.

In the first half of 2015, adjusted net profit excluding Saipem amounted to €1.05 billion decreasing by 47% (down by €0.93 billion) from the same period of the previous year.

Group consolidated adjusted net profit for the first half of 2015 was €0.79 billion, decreasing by 62%; the tax rate increased to 83%.

Operating cash flow
In the first half of 2015, cash flow from operating activities of €5.68 billion and divestment proceeds of €0.64 billion funded a large proportion of the Group’s dividend payments (€2.02 billion) and capital expenditure incurred in the period (€6.24 billion); the rest was funded by increased net borrowings 3 of €2.79 billion to €16.48 billion, as of June 30, 2015.

Compared to March 31, 2015, net borrowings increased by €1.34 billion due to cash outflows relating to the balance dividend for 2014 and capital expenditure incurred in the quarter. These were partially offset by cash flow from operations (€3.37 billion) which was negatively influenced by lower receivables due beyond the end of the reporting period, being transferred to financing institutions compared to the amount transferred at the end of the previous reporting period (down by €0.26 billion from March 31, 2015).

As of June 30, 2015, the ratio of net borrowings to shareholders’ equity including non-controlling interest – leverage 4 – increased to 0.26, compared to 0.22 as of December 31, 2014. This increase was due to greater net borrowings partly offset by higher total equity, which was helped by a sizable appreciation of the US dollar against the euro in the translation of the financial statements of Eni’s subsidiaries that uses the US dollar as functional currency, resulting in an equity gain of €3.5 billion. The US dollar was up by 7.8% against the euro at the closing rates of June 30, 2015 compared to December 31, 2014. Leverage increased by 0.04 when compared to March 31, 2015, also reflecting a partial absorption of trends in the euro-dollar exchange rate (the euro appreciated by 4% at June 30, 2015 compared to the closing of the previous reporting period at March 31, 2015), resulting in a negative currency translation difference of €1.8 billion.

Interim dividend 2015
In light of the financial results achieved for the first half of 2015 and management’s expectations for the full-year results, the interim dividend proposal to the Board of Directors on September 17, 2015, will amount to €0.40 per share 5 (€0.56 per share in 2014). The interim dividend is payable on September 23, 2015, with September 21, 2015 being the ex-dividend date.

1) With the exception of the second half of 2012, when production was supported by the recovery of the Libyan production.
2) Net cash provided by operating activities.
3) Information on net borrowings composition is furnished on page. 33.
4) Non-GAAP financial measures disclosed throughout this press release are accompanied by explanatory notes and tables to help investors gain a full understanding of said measures in line with guidance provided for by CESR Recommendation No. 2005-178b. See page 33 for leverage.
5) Dividends are not entitled to tax credit and, depending on the receiver, are subject to a withholding tax on distribution or are partially cumulated to the receivers' taxable income.

Operational highlights
Second Quarter First Quarter Second Quarter % Ch.
II Q.15
vs. II Q.14
  First Half 
201420152015KEY STATISTICS 20142015% Ch.
1,5841,6971,75410.7

Production of oil and natural gas

(kboe/d) 

1,5831,7269.0
81386090311.1

- Liquids

(kbbl/d)

8178828.0
4,2344,5964,67610.0

- Natural gas

(mmcf/d)

4,2084,63610.1
19.0925.6222.3917.3

Worldwide gas sales

(bcm)

45.8548.014.7
7.758.478.357.7

Electricity sales 

(TWh)

16.0016.825.1
2.382.042.29(3.8)

Retail sales of refined products in Europe

(mmtonnes)

4.544.33(4.6)
1.361.431.33(2.4)

Production of petrochemical products 

(mmtonnes)

2.802.76(1.6)

 

Exploration & Production
In the second quarter of 2015, Eni’s hydrocarbon production was 1.754 million boe/d, up by 10.7% y-o-y (1.726 million boe/d in the first half of 2015, up by 9%). When excluding price effects in the Company’s Production Sharing Agreements (PSAs), production grew by 7.1% in the second quarter and 5.2% in the first half of 2015. This was driven by new production start-ups and continuing ramp-ups at fields started in late 2014 mainly in Angola, Congo, United States, Egypt and the United Kingdom. It was also due to better performance in Libya. The increases were partially offset by mature field declines.

Gas & Power
In the second quarter of 2015, natural gas sales amounted to 22.39 bcm, up by 3.30 bcm or 17.3% compared to the same period of 2014. Sales in Italy (10.58 bcm) increased by 45.5% driven by higher sales to hub (Italian exchange for gas and spot markets) and higher volumes marketed in the residential market due to more favourable weather conditions. These increases were partially offset by lower volumes to the wholesale and power generation segments. Sales in the European markets were 8.37 bcm, decreasing by 7.1% from the second quarter of 2014, mainly in Germany due to the divestment of the GVS interest and in Benelux due to lower sales to wholesalers. In the first half of 2015 sales of 48.01 bcm increased by 4.7%.

Refining & Marketing
In the second quarter of 2015, the Standard Eni Refining Margin (SERM) rebounded strongly from the particularly depressed level of the second quarter of 2014 (up by 300%). This trend reflected lower crude oil feedstock prices, the short-term impact of capacity shutdowns in Europe and a shortage of products in certain areas reflecting refineries downtime. However, structural headwinds in the European refining sector remain due to sluggish demand, overcapacity and increasing competitive pressure from cheaper streams of products imported from Russia, Asia and the United States. In the second quarter of 2015, retail sales in Italy were 1.50 mmtonnes, down by 6.2% because of continuing competitive pressure. Eni’s retail market share dropped by 1.9 percentage points to 24.3% in the second quarter of 2015, compared to 26.2% in the same quarter of the previous year. Retail sales in the rest of Europe in the second quarter of 2015 were broadly the same.

Chemicals
The Chemical business benefitted from the turnaround programs and business reconversion deployed in previous years. Results also reflected the shortage of certain commodities due to unplanned facilities downtimes, which determined a partial recovery of margins mainly in ethylene, polyethylene and styrene, on the back of improved domestic consumption and the depreciation of the euro against the dollar which reduced the competitiveness of imported commodities.

Currency
The second quarter and first half results were positively impacted by the depreciation of the euro vs. the US dollar (down by 19.4% and 18.5%, in the two reporting periods, respectively).

 

Business developments

At the beginning of July, the giant Perla gas field extracted its first gas in offshore Venezuela. Perla is seen as one of the most important start-ups in Eni’s portfolio for 2015. The field is operated by a joint venture with Repsol and was developed in just 5 years, an industry-leading time-to-market. Pre-pack modules were utilized in the construction of the onshore gas treatment trains, minimizing construction works.

Perla is estimated to contain up to 17 Tcf of gas in place, or 3.1 billion boe. Development of the field has been planned in three phases to optimize time-to-market and spending. Phase 1 (Early Production) is targeting a production plateau of about 450 mmcf/d (or about 40 kboe/d net to Eni), up from an initial target of 300 mmcf/d. Phase 2 will target a plateau of about 800 mmcf/d from 2017 (or about 73 kboe/d net to Eni). Phase 3 will target a plateau of about 1,200 mmcf/d from 2020 (or about 110 kboe/d net to Eni). The development of Perla leverages a Gas Sales Agreement with PDVSA for all three phases, up until 2036. The gas will be mainly used by PDVSA for the domestic market.

An agreement was finalized with KazMunayGas to acquire 50% of the mineral rights in the Isatay block in the Kazakh area of the Caspian Sea. The Isatay block is estimated to have significant potential oil resources and will be operated by a joint operating company established by Eni and KMG on a 50/50 basis. The joint operating company will benefit from Eni’s proprietary technology. The transfer is expected to be completed within a few months and is subject to approval from the Republic of Kazakhstan.

As part of the development plans of Jangkrik, the offshore gas field discovery in Indonesia (Eni 55%, operator), two purchase and sale agreements were finalized with PT Pertamina targeting LNG volumes of 1.4 mmtonnes/y expected from the field by 2017. These agreements represent an important milestone for the Jangkrik Field Development Project, which is one of the first deep-water gas projects in Indonesia to be developed under a fast track scheme. 

In Ghana, the Offshore Cape Three Points (OCTP) integrated oil and gas project (Eni 47.22%, operator) was sanctioned, after obtaining approval from the relevant Country’s Authorities. First oil is expected in 2017, first gas in 2018 and production is expected to peak at 80,000 boe/d by 2019.

Eni signed an agreement with the Egyptian authorities, which comprises a plan to invest up to $5 billion in the development of the Country’s oil and gas reserves over the next few years. The agreement also includes a revision of certain Eni’s ongoing oil contracts. The economic effect of these revisions, effective from January 1, 2015, were accounted in the 2015 first half financial statements. The agreement also included the identification of new measures to reduce overdue amounts of trade receivables relating to hydrocarbons supplies to Egyptian state-owned companies.

In addition, Eni was awarded three Concession Agreements for the operatorship of the Southwest Melehia lease in the western Egyptian desert, in Karawan and North Leil blocks, offshore the Mediterranean Sea.

In Myanmar, following an International Bid Round, Eni was awarded two Production Sharing Contracts (PSCs) for the exploration of the offshore MD-02 and MD-04 leases.
Following a competitive bid round in Norway, two exploration licences were awarded: (i) the operatorship of the PL 806 licence (Eni 40%) in the Barents Sea; and (ii) the PL 044C (Eni 13.12%) in the North Sea.

In the United Kingdom, Eni was awarded four exploration licences located in the Central North Sea and three licences in the Southern North Sea.
In Angola, a three-year extension of the exploration activities on Block 15/06 was agreed with the Country’s authorities. In this block, the first oil of the West Hub operated project was achieved at the end of 2014.

Near-field discoveries were made in the quarter: (i) in Egypt, oil and gas discovery were made onshore in the Melehia licence with the Melehia West deep well in the Western desert and a gas discovery in the Nooros exploration prospect located in the Abu Madi West licence, offshore the Nile Delta; (ii) in Libya, two gas and condensates discoveries were made offshore in the Bouri North and Bahr Essalam South exploration prospects, located in the contractual area D, in proximity of the production facilities of the Bouri and Bahr Essalam fields; (iii) in Indonesia, evaluation activities at the Merakes gas discovery in the deep offshore of the East Sepinngan block (Eni 85%, operator) increased significantly the gas reserves in place. Eni will bring forward the appraisal campaign in order to evaluate the possible fast track development of the discovery optimizing synergies with the nearby Jangkrik field, also operated by Eni.   

In addition, the following start-ups were achieved in the first half of 2015: (i) Kizomba Satellite Phase 2, located in Block 15, offshore Angola, with recoverable resources of 190 million boe of oil and an expected plateau of 70 kboe/d; (ii) Cinguvu, in the West Hub Development project in Block 15/06 in Angola, was developed thanks to the application of a modular development model, which will sustain the production plateau. Cinguvu was the second field to come on stream after Sangos in 2014. These two fields are currently producing about 60,000 barrels/d; (iii) Nené Marine field, located in Marine XII block in Congo, which started production just eight months after obtaining the production permit. The early production phase is yielding 7.5 kboe/d and is leveraging synergies with front-end loading and existing infrastructure of the fields located in the area. The full-field development will take place in several stages and will include the installation of production platforms and the drilling of approximately 30 wells, with a plateau estimated at 120 kboe/d; (iv) Hadrian South field, in the Gulf of Mexico with an estimated daily production of approximately 300 mmcf/d of gas and 2,250 barrels of liquids (approximately 16 kboe/d net to Eni) and Lucius field with a daily production of approximately 7 kboe/d net to Eni; (v) Other field start-ups were West Franklin Phase 2 in the United Kingdom and Eldfisk 2 Phase 1 in Norway.

Tender offer procedure of the Exchangeable Bonds into ordinary shares of Galp Energia
As part of its outstanding €1,028,100,000 Exchangeable Bonds due 2015 exchangeable into ordinary shares of Galp Energia SGPS, S.A., Eni being the issuer decided to accept the offer of bondholders to tender their notes for purchase by Eni by cash in the aggregate principal amount of €514,900,000. The purchase price was determined pursuant to a tender offer procedure by means of a competitive bid. The purchase price paid by Eni for the Notes validly tendered and accepted for purchase was set at €100,400 per €100,000 in principal amount of such Notes (the "Purchase Price"). The transaction was settled June 4, 2015. Eni also paid the interest income accrued until the settlement date. The Notes purchased by Eni will be cancelled in accordance with their terms and conditions, whereas the Notes which were not successfully tendered and/or repurchased, will remain outstanding and subject to their terms and conditions.

Versalis
Eni’s subsidiary Versalis, Ecombine and EVE Rubber Institute signed a Joint Technology agreement to develop an innovative technology for the production of advanced elastomer compounds, in order to offer to the tire market an unrivalled array of new materials with enhanced mechanical performances and environment-friendly features.
Signed an agreement with the Indian company Reliance Industries Ltd for the marketing of the styrene-butadiene rubber.

Corporate Social Responsibility
In May 2015, Eni was awarded the “Corporate Social Responsibility Award” for outstanding contribution to sustainable development in territories in which Eni operates and in corporate social responsibility. Eni stood out in investing in human resources, focusing on the environment, community development, culture and technological innovation.

Eni and the Politecnico of Milan renewed their collaboration agreement for "frontier" research, which will be extended to 2018. Based on economic, environmental and social criteria, this agreement is aimed at supporting frontier innovation in processes and technologies in the oil & gas industry. 

 

Outlook

The Company is forecasting a moderate strengthening in global economic growth in 2015, driven by the United States. However, certain risks have the potential to mitigate this outlook: uncertainty remains around the strength of the Eurozone recovery, the extent of the slowdown of the Chinese economy and of other emerging economies, as well as the extent of stability in financial markets. Oil prices are forecast to be significantly lower than the last year, due to oversupplied global markets. In the Exploration & Production segment, management will carry out efficiency initiatives in operating costs and by optimizing investments, while retaining a strong focus on project execution and time-to-market in order to cope with the negative impact of a lower oil price environment. Looking at the Company’s business segments exposed to the European economic outlook, Eni’s management anticipates challenging trading conditions reflecting structural headwinds due to weak commodity demand, oversupply/overcapacity and competitive pressure. The fall in oil prices may only lessen the negative impact of such trends. A recovery in profitability in these sectors will leverage on the continued renegotiation of gas supply contracts, restructuring/reconversion of the production capacity tied to the oil cycle, cost efficiencies and margin optimization.

Management expects the following production and sales trends for Eni's businesses:
- Hydrocarbon production: production is expected to achieve strong growth, up over 7% driven by continuing new fields start-ups and ramp-ups in 2014 mainly at our profit centres in Venezuela, Norway, the United States, Angola and Congo and projections of higher volumes in Libya;
- Gas sales: excluding the impact of the divestment of Eni’s assets in Germany and the unusual weather conditions in 2014, natural gas sales are expected to remain stable compared to 2014. Management intends to leverage on marketing innovation in the wholesale and retail markets in order to mitigate competitive pressures;
- Refining throughputs on Eni’s account: excluding the impact of the divestment of the Company share of capacity in Eastern Europe, volumes are expected to increase driven by a favourable trading environment and better plant performance on the back of yield ramp-up at the EST conversion unit at the Sannazzaro refinery and lower facilities downtime. Production of bio-fuels are projected to increase at the restructured Venice plant;
- Retail sales of refined products in Italy and the Rest of Europe: retail sales in Italy are expected to slightly decline compared to 2014 due to weak demand trends and strong competitive pressure. However, the proprietary network is expected to perform well. Outside Italy, retail sales are expected to be stable excluding the impact of the ongoing divestment of the Company’s retail networks in Eastern Europe.

In 2015, in the context of lower oil prices, Eni’s management plans to implement capital project optimization and rescheduling which will reduce expenditure compared to the 2014 levels, excluding the impact of the US dollar exchange rate. These initiatives are estimated to have a limited impact on our production growth outlook in the near to medium term. Management expects that based on projected cash flows from operations and portfolio transactions, leverage at year end will remain within the 0.30 threshold.

This press release has been prepared on a voluntary basis in accordance with the best practices in the marketplace. It provides data and information on the Company’s business and financial performance for the second quarter and the first half of 2015 (unaudited). Results of operations for the first half of 2015 and material business trends have been extracted from the interim consolidated report 2015 which has been prepared in compliance with article 154-ter of the Italian code for securities and exchanges (“Testo Unico della Finanza” - TUF) and approved by the Company’s Board of Directors yesterday. The interim report has been transmitted to the Company’s external auditor as provided by applicable regulations. Publication of the interim report is scheduled within the terms of law, alongside the Company’s external auditor report upon completion of relevant audits.

Results and cash flow are presented for the first quarter and the second quarter of 2015 and for the second quarter 2014. Information on liquidity and capital resources relates to end of the periods as of June 30, 2015, March 31, 2015, and December 31, 2014. Statements presented in this press release are comparable with those presented in the statutory financial statements of the Company’s consolidated annual report on Form 20-F and interim report.

Quarterly accounts set forth herein have been prepared in accordance with the evaluation and recognition criteria set by the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and adopted by the European Commission according to the procedure set forth in Article 6 of the European Regulation (CE) No. 1606/2002 of the European Parliament and European Council of July 19, 2002. Those criteria are unchanged from the 2014 annual report on form 20-F filed with the US SEC on April 2, 2015 which investors are urged to read.

New segmental reporting of Eni
Eni’s segmental reporting is established on the basis of the Group’s operating segments that are evaluated regularly by the chief operating decision maker (the CEO) in deciding how to allocate resources and in assessing performance.
Effective January 1, 2015, Eni’s segment information was modified to align Eni’s reportable segments to certain changes in the organization and in profit accountability defined by Eni’s top management. The main changes adopted compared to the previous setup of the segment information related to:

  • Results of the oil and products trading activities and related risk management activities were transferred to the Gas & Power segment, consistently with the new organizational setup. In previous reporting periods, results of those activities were reported within the Refining & Marketing segment as part of a reporting structure which highlighted results for each stream of commodities. In 2014, this activity reported net sales from operations of approximately €50 billion and an operating loss of €122 million;
  • R&M and Chemicals operating segments are now combined into a single reportable segment because a single manager is accountable for both the two segments, they show similar long-term economic performance, have comparable products and production processes;
  • The previous reporting segments “Corporate and financial companies” and “Other activities” have been combined being residual components of the Group,  in order to reduce the number of reportable segments in line with the segmental reporting of the comparable oil&gas players.


The segmental financial information reported to the CEO comprises segment revenues, operating profit, as well as segmental assets and liabilities, which are reviewed only on occasion of the statutory reports (the annual and the interim reports). Furthermore, management also assesses the adjusted operating and net profit by business segment. Adjusted results represent non-GAAP measures and are disclosed elsewhere in this press release.
As of June 30, 2015, Eni’s reportable segments have been regrouped as follows:

  • E&P: is engaged in exploring for and recovering crude oil and natural gas, including participation to projects for the liquefaction of natural gas;
  • G&P: is engaged in supply and marketing of natural gas at wholesale and retail markets, supply and marketing of LNG and supply, production and marketing of power at retail and wholesale markets. G&P is engaged in supply and marketing of crude oil and oil products targeting the operational requirements of Eni’s refining business and in commodity trading (including crude oil, natural gas, oil products, power, emission allowances, etc.) targeting to both hedge and stabilize the Group industrial and commercial margins according to an integrated view and to optimize margins;
  • R&M and Chemicals: is engaged in manufacturing, supply and distribution and marketing activities for oil products and chemicals. In previous reporting periods, these two operating segments were reported separately;
  • Engineering & Construction: Eni through its subsidiary Saipem which is listed on the Italian Stock Exchange (Eni’s share being 43%) is engaged in the design, procurement and construction of industrial complexes, plants and infrastructures for the oil&gas industries and in supplying drilling and other oilfield services;
  • Corporate and other activities: represents the key support functions, comprising holdings and treasury, headquarters, central functions like IT, HR, real estate, self-insurance activities, as well as the Group environmental clean-up and remediation activities performed by the subsidiary Syndial.


The comparative reporting periods of this press release have been restated consistently with the new segmental reporting adopted by the Group effective January 1, 2015.

In the table below the key performance indicators of segmental reporting are furnished with reference to the full year 2014 and to the comparative quarterly and semi-annual reporting periods furnished in this press release, which were restated in accordance with the new e segmental reporting adopted by Eni.
For more details on Eni’s new segmental reporting see the notes to the press release on the first quarter of 2015 results, published on April 29, 2015.

AS REPORTED
(€ million)E&P G&P R&M Versalis Engineering
& Construction
Corporate
and financial
companies
Other activitiesImpact of unrealized
intragroup profit
elimination
GROUP

Second quarter 2014

         

Net sales from operations

7,3685,55815,3391,4023,07534219(5,750)27,353

Operating profit

2,79140(262)(158)164(63)(93)(164)2,255

Adjusted operating profit

2,98170(219)(93)165(58)(43)(75)2,728

First Half 2014

         

Net sales from operations

14,80214,78228,6862,8045,96667134(11,189)56,556

Operating profit

6,221653(623)(286)291(143)(145)(67)5,901

Adjusted operating profit

6,431311(442)(182)293(139)(88)356,219

Full year 2014

         

Net sales from operations 

28,48828,25056,1535,28412,8731,37878(22,657)109,847

Operating profit

10,766186(2,229)(704)18(246)(272)3987,917

Adjusted operating profit

11,551310(208)(346)479(265)(178)23111,574

Assets directly attributable

68,11316,60312,9933,05914,2101,042258(486)115,792

 

AS RESTATED
(€ million)E&P G&P R&M and ChemicalsEngineering
& Construction
Corporate
and other activities
Impact of unrealized
intragroup profit
elimination
GROUP

Second quarter 2014

       

Net sales from operations

7,36817,9687,4393,075353(8,850)27,353

Operating profit

2,791(19)(361)164(156)(164)2,255

Adjusted operating profit

2,98114(256)165(101)(75)2,728

First Half 2014

       

Net sales from operations

14,80237,94114,4555,966691(17,299)56,556

Operating profit

6,221592(848)291(288)(67)5,901

Adjusted operating profit

6,431256(569)293(227)356,219

Full year 2014

       

Net sales from operations 

28,48873,43428,99412,8731,429(35,371)109,847

Operating profit

10,76664(2,811)18(518)3987,917

Adjusted operating profit

11,551168(412)479(443)23111,574

Assets directly attributable

68,11319,34213,31314,2101,300(486)115,792

 

Non-GAAP financial measures and other performance indicators disclosed throughout this press release are accompanied by explanatory notes and tables to help investors to gain a full understanding of said measures in line with guidance provided by recommendation CESR/05-178b.

Eni’s Chief Financial and Risk Management Officer, Massimo Mondazzi, in his position as manager responsible for the preparation of the Company’s financial reports, certifies that data and information disclosed in this press release correspond to the Company’s evidence and accounting books and records, pursuant to rule 154-bis paragraph 2 of Legislative Decree No. 58/1998.

Disclaimer
This press release, in particular the statements under the section “Outlook”, contains certain forward-looking statements particularly those regarding capital expenditure, development and management of oil and gas resources, dividends, allocation of future cash flow from operations, future operating performance, gearing, targets of production and sales growth, new markets and the progress and timing of projects. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors, including the timing of bringing new fields on stream; management’s ability in carrying out industrial plans and in succeeding in commercial transactions; future levels of industry product supply; demand and pricing; operational issues; general economic conditions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; development and use of new technology; changes in public expectations and other changes in business conditions; the actions of competitors and other factors discussed elsewhere in this document. Due to the seasonality in demand for natural gas and certain refined products and the changes in a number of external factors affecting Eni’s operations, such as prices and margins of hydrocarbons and refined products, Eni’s results from operations and changes in net borrowings for the second quarter of the year cannot be extrapolated on an annual basis.

* * *

Eni
Società per Azioni Roma, Piazzale Enrico Mattei, 1
Share capital: euro 4,005,358,876 fully paid
Tax identification number 00484960588
Tel.: +39 0659821 - Fax: +39 0659822141

This press release for the third quarter and nine months of 2014 (unaudited) is also available on the Eni web site eni.com.

The full version of the Press Release is available in PDF format.

 

Download the press release (PDF)

PDF 336.33 KB 30 July 2015 CEST 07:45
PDF 336.33 KB