- FINANCE, STRATEGY AND REPORTING
Eni's Board of Directors yesterday approved the consolidated results for the first quarter of 2020 (not subject to audit).
Having examined the results, Eni CEO Claudio Descalzi said:
“The period since March has been the most complex period the global economy has seen for more than 70 years. For the energy industry, and in particular for Oil&Gas, the complexity is even greater given the overlap of the effects of the pandemic with the collapse in oil prices. Eni is tackling this period by relying on a safe operating organisation for its employees, contractors, and the populations of its host countries. Furthermore, Eni’s people have shown an incredible capacity and willingness to adapt to the difficult circumstances at the moment, allowing the Group to operate with full continuity. I would like to thank them for this. The business portfolio is more resilient than ever before, while the capital structure is very solid thanks to actions taken in recent years. The Upstream portfolio, in particular, has a competitive break-even point and is flexible, allowing for activities and financial commitments to be adjusted as the situation develops. The Mid-Downstream portfolio is reacting well to the consumer crisis, recording EBIT that was higher than the same period in 2019. Overall, EBIT was above market forecasts, while cash flow from operations before working capital financed investments of €1.9 billion. The balance sheet is robust and above all shows €16 billion of cash on hand, which will allow the Group to manage the drop in business due to prices and the pandemic. Like everyone, we expect a complicated 2020, but thanks to our strengths we are sure we can swiftly resume our journey towards an even more profitable and sustainable future, as set out in our latest strategic plan.”
Exploration & Production
Gas & Power
Refining & Marketing and Chemicals
Energy Solutions, decarbonization and circular economy
Group results
Quarterly results affected by the combined impact of an ongoing economic recession due to the COVID-19 and falling energy prices.
Outlook 2020
Eni assumes a gradual recovery in global consumption of oil, natural gas and power in the second half of the year, particularly in Eni’s reference markets.
Based on this macroeconomic scenario, Eni reduced the Company’s outlook for Brent crude oil prices, down to 45 $/bbl and 55 $/bbl respectively in 2020 and 2021. Spot gas prices at the Italian hub have been reduced by 15% in 2020 and by 30% in 2021, while refining margin is expected to decline by 18% in 2020. Considering a highly volatile scenario and ongoing disruptions in the global economy, management is going to disclose a sensitivity analysis of Eni’s 2020 results to changes in the scenario (see below).
Eni has promptly defined its responses to the current crisis scenario by reviewing the industrial plan for the year 2020 and 2021 in order to preserve the robustness of its balance sheet. The review of the industrial plan foresees:
1 They comprise a reduction in global gas demand, lower offtakes at LNG supply contracts in Asia, lower consumption of fuels and chemical products, operational impacts on hydrocarbon production, higher allowances for doubtful accounts due to an expected deterioration in the counterparty risk.
The full version of the Press Release is available in PDF format.