Management’s expectations for our business performance in 2017 are provided below.
Eni is leveraging on its core strengths to build a broad portfolio of high margin opportunities, enabling it to capture upside as oil prices improve and defend value in future downturns. The 2017-2020 plan will enable Eni to achieve superior cash flow growth by building a high margin portfolio based on material and conventional resources, designed to cost operations and high value assets.
Confirmed the 2017 target of 0.8 bln boe of new resources discovered, at a unitary discovery cost of approximately 1 $/bbl.
Expected an average FY production of 1.815 million boe/d, matching the all-time high in 2010, a 5% increase from 2016 excluding price effects at PSAs and OPEC cuts. This will be driven by new project start-ups (Indonesia, Angola and Ghana), ramp-ups of fields entered into operation in 2016, mainly in Kazakhstan, Egypt and Norway, as well as the restart of certain Libyan fields. Contingent factors such as the shutdown of the Val d’Agri oil centre, which was down for almost the entire second quarter, the impact of OPEC cuts, as well as certain contractual one-offs recorded in 2016, will be absorbed by the implementation of other initiatives to optimize production, as well as by the earlier than planned start-up of the large projects in Angola, Indonesia and Ghana.
Expected structural positive results from 2017. The wholesale business is seen to achieve structural breakeven one year earlier than planned.
Eni plans to retain market share in the retail segment, increasing the value of the existing customer base by developing innovative commercial initiatives, integrating services and optimizing operations.
Confirmed the target of refining breakeven margin at 3 $/barrel in 2018.
Refinery intakes on own account are expected to decrease slightly y-o-y due to the downtime of certain assets at the Sannazzaro refinery, which has been almost completely offset by higher volumes at Milazzo. Stable at approximately 90% the refinery utilization rate. Against a backdrop of strong competition, management expects to consolidate both volume and market share in the Italian retail market by leveraging innovation and product and service differentiation. In the rest of Europe, sales on a like-for-like basis are expected to increase slightly.
In the Chemical business, we expect stable sales volumes. Cracker margins are expected to be broadly in positive territory, with a peak in butadiene, while polyethylene margins are expected to decline. Expected record full year results.
2017 FY capex projected at €7.5 billion on a proforma basis, i.e. net of the capex which will be reimbursed in connection with asset disposals and advances paid by the Egyptian partners in the Zohr project. Confirmed the target of reducing capex by approximately 18% y-o-y at constant exchange rates.
Cash neutrality: confirmed organic coverage of capex and dividends at a Brent price of 60 $/bbl in 2017; 45 $/bbl considering cash inflow yielded by the dual exploration model.
Leverage at the end of 2017: projected at 0.25, substantially declining from the 2016 level, also reflecting the expected closing of portfolio transactions, particularly the Mozambique deal.
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