Italian oil and gas company Eni booked a net loss of over $3 billion in the first quarter of the year due to the overlapping effects of the coronavirus pandemic and the oil price collapse.
Eni on Friday posted a net loss of €2.93 billion ($3.16Bn) mainly due to the alignment of the book value of inventories to market prices current at the end of the quarter.
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This compares to a net profit of €1.1 billion ($1.2Bn) in the first quarter of 2019.
Special charges also included impairment losses from oil & gas assets and negative fair-valued derivatives, which couldn’t be accounted as hedges, due to the scenario effects.
The company’s hydrocarbon production in 1Q 2020 was 1.774 million boe/d, 3.6 per cent lower than the first quarter of 2019.
Net of price effects, the decline was 50% due to lower volumes in Libya driven by an anticipated contractual trigger, force majeure and lower entitlements/spending, more than offsetting positive portfolio contribution mainly from Norway.
The remaining 50% of the reduced output for the quarter was due to the impact of lower gas demand, mainly in Egypt.
Eni has 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 capex curtailments of approximately €2.3 billion for 2020, 30 per cent lower than the initial capital budget, and anticipated further reductions of €2.5-3 billion in 2021, i.e. 30%-35% lower than original plans.
Eni’s expected production level in 2020 is 1.75–1.80 mboe/d, which is lower than initial projections due to capex curtailments, COVID-19 effects, a lower global gas demand also impacted by the pandemic effects and finally extension of force majeure in Libya for the entire first half of the year.
This production guidance does not take into account any possible impacts associated with the recently announced OPEC+ cuts that are to be implemented on a field-by-field basis.
Eni has also implemented widespread initiatives to save approximately €600 million ($646.3Mn) of expenses in 2020.
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Eni booked a net loss of over $3 billion in the first quarter of the year due to the overlapping effects of the coronavirus pandemic and the oil price collapse.
