Overview

In detail:

  • performance data for 2016 in the Exploration & Production sector
  • the 2016 capital expenditure table in the Exploration & Production sector

2016 Performance

PERFORMANCE - EXPLORATION & PRODUCTION
 201420152016
Employees at year end (number) 12.777 12.821 12.494
TRIR (Total Recordable Injury Rate) (recordable injuries/worked hours) x 1,000,000 0,56 0,34 0,34
of which: employees   0,20 0,22 0,34
contractors   0,68 0,39 0,34
Net proved reserves of hydrocarbons (mmboe) 6.602 6.890 7.490
Average reserve life index (years) 11,3 10,7 11,6
Hydrocarbon production (a) (kboe/d) 1.598 1.760 1.759
Organic reserve replacement ratio   112 148 193
Profit per boe (b) (c) ($/boe) 14,5 7,4 2,7
Opex per boe (b)   8,4 7,2 6,2
Cash flow per boe   30,1 20,9 12,9
Finding & Development cost per boe (c)   21,5 19,3 13,2
Direct GHG emissions (mmtonnes CO2 eq) 23,4 22,8 20,4
CO2 emissions/100% operated hydrocarbon gross production (d) (mmtonnes CO2 eq/tep) 0,201 0,182 0,166
% produced water re-injected (%) 56 56 58
Volumes of hydrocarbon sent to flaring (mmcm) 1.767 1.989 1.950
of which: sent to flaring process   1.678 1.564 1.530
Oil spills due to operations (> 1 barrel) (barrels) 936 1.177 1.025
Interventions on the territory based on agreements, conventions and PSAs (Community investment) (€ million) 63 72 63

(a) Includes Eni's share in joint ventures and equity-accounted entities.
(b) Related to consolidated subsidiaries.
(c) Three-year average.
(d) Hydrocarbon production from fields fully operated by Eni (Eni's interest 100%) amounting to 122 mln toe, 125 mln toe and 117 mln toe in 2016, 2015 and 2014, respectively.

In 2016:
  • Safety performance continued on a positive trend, with a total recordable injury rate of 0.34 (unchanged from 2015). Eni is engaged in maintaining a high safety standard in each of its operations leveraging also on continuous HSE awareness programs by means of specific projects.
  • Greenhouse gas emissions decreased by 11% compared to the previous year leveraging on the continuous improvements in energy efficiency, logistics optimization and initiatives to contain fugitive emissions, in particular developed for the 2016 in Egypt, Kazakhstan, the United Kingdom, Ecuador and United States. In March 2016, Goliat platform started-up, through advanced technology solutions thus contributing to the combustion emissions containment. The trend of GHG emission index compared to operated gross hydrocarbon production was positive with a reduction of 9%. This performance is better than the 2016 full year target.
  • Water reinjection continues to achieve an excellent industry performance (58% in 2016), leveraging on the continuous campaign started in certain operational plants, in particular in Ecuador, Egypt and Congo in the full year.
  • For the full year 2016, the E&P segment reported a decline of 40% in adjusted operating profit due to lower realization on commodities in dollar terms (down by 20%) as well as the Val d ’ Agri shutdown, which lasted four months and half. These effects were only partially offset by higher production in other areas and efficiency improvements with lower opex to 6.2 $/boe (down by 14% from 7.2 $/boe reported in 2015) and DD&A1 (down by 16% from 2015).
  • 2016 oil and natural gas production was 1,759 kboe/d, in line with 2015, in spite of the Val d'Agri shutdown. Production start-ups and ramp-ups added approximately 280 kboe/d in 2016. 2017 expected production will achieve a record of 1.84 million boe/d increasing by approximately 5% from 2016.
  • Estimated net proved reserves at December 31, 2016 amounted to 7.5 bboe based on a reference Brent price of $42.8 per barrel. Organic reserves replacement ratio surged to 193%, the best ever performance in Eni's history. The 2016 reserves replacement ratio remains very robust at 139% also considering the 40% sale of Zohr on a pro forma basis. The reserves life index was 11.6 years (10.7 years in 2015)

Results

RESULTS - EXPLORATION & PRODUCTION
2014 (€ milioni)20152016Var. ass.Var. %
10.727
Operating profit (loss)  
(959)
2.567
3.526
..
952
Exclusion of special items:  
5.141
(73)
   
853
- impairments losses (impairment reversals), net  
5.212
(684)
   
  - impairment of exploration projects  
169
7
   
(70)
- net gains on disposal of assets  
(403)
(2)
   
24
- provision for redundancy incentives  
15
24
   
(5)
- risk provisions    
105
   
(28)
- commodity derivatives  
12
19
   
6
- exchange rate differences and derivatives  
(59)
(3)
   
172
- other  
195
461
   
11.679
Adjusted operating profit (loss)  
4.182
2.494
(1.688)
(40,4)
(273)
Net financial income (expense) (a)  
(272)
(55)
217
 
333
Net income (expense) from investments (a)  
254
68
(186)
 
(7.170)
Income taxes (a)  
(3.173)
(1.999)
1.174
 
61,1
Tax rate (%)  
76,2
79,7
3,5
 
4.569
Adjusted net profit (loss)  
991
508
(483)
(48,7)
  Results also include:          
1.478
exploration expense:  
871
374
(497)
(57,1)
368
- prospecting, geological and geophysical expenses  
254
204
(50)
(19,7)
1.110
- write-off of unsuccessful wells (b)  
617
170
(447)
(72,4)
  Average realizations          
88,71
Liquids (c) ($/barile)
46,30
39,18
(7,12)
(15,4)
6,87
Natural gas ($/kcf)
4,55
3,27
(45,27)
(28,2)
65,49
Total hydrocarbons ($/boe)
36,47
29,14
(7,33)
(20,1)

(a) Excluding special items
(b) Also includes write-off of unproved exploration rights, if any, related to projects with negative outcome.
(c) Includes condensates.



In 2016, the Exploration & Production segment reported an adjusted operating profit of €2,494 million, down by 40.4% y-o-y. The €1,688 million decline mainly reflected a weaker commodity environment, with the marker Brent down by 16.7% and declining gas prices in Europe and the United States. Profit for the year was also negatively affected by the Val d’Agri shutdown, which lasted four months and half. These effects were only partially offset by higher production in other areas and lower operating expenses and DD&A. This latter was due to lower capital expenditure and the reduction in the carrying amounts of oil&gas properties following the material impairment losses booked last year (€5,212 million). Adjusted operating profit excluded a positive adjustment of €73 million and related to asset revaluations of €1,440 million at oil&gas properties driven by an upward revision to management’s long-term assumption for the benchmark Brent price to $70 per barrel from the previous $65 adopted in the financial projections of the 2017-2020 industrial plan. These were absorbed by:
  • impairment losses of gas properties driven by a lowered price outlook in Europe and other oil&gas properties due to contractual changes, reserves revision and a higher country risk (overall amount of €756 million)
  • other charges of €461 million mainly relating to the impairment of certain overdue receivables owed by national oil companies due to the expected outcome of ongoing negotiations. The recognition of those receivables as deductible items for tax purposes resulted in the reversal of unused deferred tax liabilities of €380 million.

For the FY2016, adjusted net profit amounted to €508 million, a decline of €483 million, or 48.7%, from 2015 due to a lower operating performance. In 2016, taxes paid represented approximately 32% of the cash flow from operating activities of the E&P segment before changes in working capital and income taxes paid.

Capital expenditure

CAPITAL EXPENDITURE - EXPLORATION & PRODUCTION
 (€ million)201420152016Change% Ch.
Acquisition of proved and unproved properties       2 2  
North Africa       2    
Exploration   1.030 566 417 (149) (26,3)
Italy   1        
Rest of Europe   132 133 11    
North Africa   177 232 312    
Sub-Saharan Africa   511 157 30    
Kazakhstan            
Rest of Asia   89 15 57    
America   109 29 7    
Australia and Oceania   11        
Development   9.021 9.341 7.770 (1.571) (16,8)
Italy   880 679 407    
Rest of Europe   1.574 1.264 590    
North Africa   832 1.570 2.447    
Sub-Saharan Africa   3.085 2.998 2.176    
Kazakhstan   521 835 707    
Rest of Asia   1.105 1.333 1.213    
Americas   921 637 220    
Australia and Oceania   103 25 10    
Other expenditure   105 73 65 (8) (11,0)
    10.156 9.980 8.254 (1.726) (17,3)

Capital expenditure of the Exploration & Production segment (€8,254 million) concerned development of oil and gas reserves (€7,770 million) directed mainly outside Italy, in particular in Egypt, Angola, Kazakhstan, Indonesia, Iraq, Ghana and Norway. Development expenditures in Italy concerned in particular the facility upgrading of Viggiano oil center in Val d'Agri (see - Main exploration and development projects - Italy) as well as sidetrack and workover activities in mature fields.

Exploration expenditures (€417 million) were directed in particular to Egypt, Indonesia, Libya and Angola. In 2016 overall expenditure in R&D of the E&P segment amounted to €62 million (€78 million in 2015).

Notes

1 Depreciation, depletion and amortization.
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