Highlights

Results > In the first half of 2013, adjusted net profit amounted to €1.96 billion decreasing by 46% or by 35.9% net of losses incurred by the Engineering & Construction segment, due to a lower operating performance (down 43%1 or down 33.3% excluding Saipem losses) reflecting declining Brent prices and ongoing difficult conditions in mid and downstream sectors.

Net cash generated by operating activities of €4,75 billion and cash from disposals of €2,47 billion were used to fund financing requirements associated with capital expenditure (€5.93 billion), mainly focused on the development of hydrocarbon reserves and dividend payments of €2.17 billion. Net borrowings as of June 30, 2013 increased by €0.98 billion from December 31, 2012 to €16.49 billion.

Ratio of net borrowings to shareholders’ equity including minority interest – leverage – was 0.27 at June 30, 2013.

Interim dividend > In light of the financial results achieved for the first half of 2013 and management’s expectations for full-year results, the interim dividend proposal to the Board of Directors on September 19, 2013, will amount to €0.55 per share (€0.54 per share in 2012). The interim dividend is payable on September 26, 2013, with September 23, 2013 being the ex dividend date.

Divestment of an interest in Eni East Africa > In July 2013, Eni and China National Petroleum Corporation (CNPC) closed the sale of 28.57% share capital of the subsidiary Eni East Africa, which currently owns a 70% interest in Area 4 offshore Mozambique, for an agreed price equal to $4,210 million, integrated for contractual balances provided until the date of closing. CNPC indirectly acquires, through its 28.57% equity investment in Eni East Africa, a 20% interest in Area 4, while Eni will retain a 50% interest through the remaining stake in Eni East Africa. CNPC’s entrance into Area 4 is a strategic improvement for the project because of the standing of the company in the upstream and downstream sectors worldwide.

Liquids and gas production > In the first half of 2013 liquid and gas production was 1.624 million boe/d, representing a decrease of 2.7% due to force majeure events in Nigeria, particularly significant, and in Libya, and by the disposals made in 2012, while it was partially helped by the restart of the Elgin-Franklin field in the UK, which was offline in 2012. When excluding these impacts, production was unchanged for the first half of 2013, driven by new field start-up sand continuing production ramp-ups, partly offset by planned facility downtimes and mature fields decline.

Start-ups > In line with production plans the following projects have been started up: MLE-CAFC (Eni’s interest 75%) and El Merk (Eni’s interest 12.25%) in Algeria,  liquefaction plant Angola LNG (13.6%), the offshore Abo- Phase 3 project in Nigeria, giant heavy oil field Junin 5 (Eni’ s interest 40%) in Venezuela, and Skuld (Eni’s interest 11.5%) in Norway.

Exploration successes > Main exploration results occurred in Mozambique, Egypt, Angola, Congo, Ghana and Pakistan adding 950 million boe of fresh resources to the Company’s resource base, with unit exploration cost of 1.1 $/boe.

Natural gas sales > First half sales of gas were 49.26 bcm, decreasing by 3% from the first half of 2012. Excluding the divestment of Galp, sales decreased by 0.7% driven by poor demand in the wake of the downturn and strong competitive pressure. Sales in Italy held well (up 1.9%) in spite of a weak power generation segment.

Safety > In the first half of 2013 the injury frequency rates relating to employees and contractors progressed in their positive trends when compared to the first half of 2012 (down 38.6% for contractors and down 46.7 for employees) as well as to the full year 2012. The Company prosecuted in the communication and training program “Eni in safety” aimed at reducing the injury frequency related to behavioural factors, the first injury cause. The first half of 2013 saw also the continuation of the “zero fatalities” project with the objective to deal incisively with the critical issue of fatalities.

Snam divestment > On May 9, 2013, Eni divested to institutional investors 395,253,345 shares equal to 11.69% of the share capital of Snam S.p.A, for a total consideration of €1,458.5 million.  Following the placement Eni has completed the divestment of its interest in Snam with the residual interest of 8.54% in Snam underlying the €1,250 million convertible bond due on January 2016.

Galp divestment > On May 31, 2013, Eni divested to institutional investors 55,452,341 ordinary shares, corresponding to approximately 6.7% of the share capital of Galp Energia SGPS S.A for a total consideration of €677.6 million. As of June 30, 2013, Eni retains a 16.34% interest in  Galp, of which 8% underlying the approximately €1,028 million exchangeable bond due on November 2015 and 8.34% subject to certain pre-emption rights or options exercisable by Amorim Energia.

Business developments > The North Caspian Operating Company Consortium (Eni share 16.81%) that operates the development of the Kashagan field is currently focused on completing the Experimental Program. In June 2013, the onshore treatment plant in Bolashak came on line; in July operational testing activities started at offshore production facilities. Production start-up is expected in the next weeks. Security remains the priority of the Consortium throughout the whole process to achieve first oil.

In June 2013, Eni and Rosneft completed a strategic cooperation agreement for operating offshore exploration activities off the Russian section of the Barents Sea (Fedynsky and Central Barents licenses) where seismic surveys have been started, and the Russian section of the Black Sea (Western Cernomorsky license).

In June 2013, following an international licensing round Eni was awarded the operatorship with an ownership interest of 40% in the PL 717, PL 712 and PL 716 licenses and the ownership interest of 30% in the PL 714 exploration license in the Norwegian section of the Barents Sea.

1 Calculated excluding Snam’s contribution to Group results. This is the result of Snam transactions with Eni included in the continuing operations results of the first half 2012 according to IFRS 5. Adjusted operating profit and adjusted net profit are not provided by IFRS.

Financial highlights
      First half
2012   (€ million) 2012 2013
127.220

Net sales from operations - continuing operations 

  63.203 59.276
15.071

Operating profit - continuing operations 

  9.340 5.293
19.798

Adjusted operating profit - continuing operations (a)

  10.458 5.660
7.790

Net profit  (b)

  3.844 1.818
4.200

Net profit - continuing operations(b) 

  3.700 1.818
3.590

Net profit - discontinued operations (b) 

  144  
7.130

Adjusted net profit - continuing operations(a) 

  3.833 1.961
12.356

Net cash provided by operating activities - continuing operations

  8.340 4.752
12.761

Capital expenditure - continuing operations

  5.647 5.931
139.878

Total assets at period end

  150.675 137.585
62.558

Shareholders' equity including non-controlling interest at period end

  63.514 61.845
15.511

Net borrowings at period end

  26.909 16.492
78.069

Net capital employed at period end

  90.423 78.337
18,34

Share price at period end

(€) 16,78 15,78
3.622,8

Number of shares outstanding at period end

(million) 3.622,7 3.622,8

* Pertaining to continuing operations. Following the divestment plan of the Regulated Businesses in Italy, results of Snam are represented as discontinued operations throughout this Interim Consolidated Report.

(a) For a detailed explanation of adjusted  (net and operating) profits, that exclude inventory holding gain/loss and special items, see paragraph "Reconciliation of reported operating profit and reported net profit to results on an adjusted basis".

(b) Profit attributable to Eni's shareholders.

Summary financial data **
      First half
2012     2012 2013
 

Net profit - continuing operations

     
1,16

- per share (a)

(€) 1,02 0,50
2,98

- per ADR (a) (b)

(USD) 2,64 1,31
 

Adjusted net profit - continuing operations

     
1,97

- per share (a)

(€) 1,06 0,54
5,06

- per ADR (a) (b)

(USD) 2,75 1,42
10,1

Return On Average Capital Employed (ROACE) adjusted 

  n. d. 7,0
13,6

Return On Average Equity

  6,2 3,1
0,25

Leverage

  0,42 0,27
11,9

Coverage

  14,6 8,8
1,4

Current ratio

  1,2 1,4
79,8

Debt coverage

  31,3 28,8

** See "Glossary" for indicators explanation.

     

(a) Fully diluted. Ratio of net profit and average number of shares outstanding in the period. Dollar amounts are converted on the basis of the average EUR/USD exchange rate quoted by ECB for the period presented.

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

Operating and sustainability data
      First half
2012     2012 2013
77.838

Employees at period end

(number) 73.844 81.084
12.860

of which  - women

  12.559 13.283
51.194

                - outside Italy

46.814 54.509
18,9

Female managers

(%) 18,7 19,0
0,57

Employees injury frequency rate

(No. of accidents per million hours worked) 0,62 0,38
0,45

Contractors injury frequency rate

  0,55 0,29
1,10

Fatality index

0,93 0,95
3.856

Oil spills due to operations in the environment

(barrels)  668 1.123
52,49

GHG emission

(mmtonnes CO2 eq) 26,32 24,06
211

R&D expenditures (a) 

(€ million) 82 88
 

Exploration & Production

     
1.701

Production of hydrocarbons 

(kboe/d) 1.669 1.624
882

- Liquids

(kbbl/d) 861 832
4.501

- Natural gas

(mmcf/d) 4.437 4.350
598,7

Production sold

(mmboe) 293,8 276,1
 

Gas & Power

     
95,32

Worldwide gas sales (b)             

(bcm) 50,76 49,26
34,78

- in Italy

18,67 19,03
60,54

- outside Italy

  32,09 30,23
 

Refining & Marketing

     
30,01

Refinery throughputs on own account

(mmtonnes) 14,27 13,76
10,87

Retail sales of petroleum products in Europe

5,27 4,82
2.064

Average throughput of service stations in Europe

(kliters) 1.079 1.003
 

Versalis

     
6.090

Production

(ktonnes) 3.114 3.025
3.953

Sales of petrochemical products

2.170 1.988
66,7

Average utilization rare

(%) 66,0 68,0
 

Engineering & Construction

     
13.391

Orders acquired

(€ million) 6.303 7.151
19.739

Order backlog at period end

  20.323 21.704

(a) Net of general and administrative costs.

(b) Includes Exploration & Production natural gas sales amounting to 1.34 bcm (1.30 and 2.73 bcm in the first half of 2012 and in the year 2012, respectively).