Eni 3Q profit rises 3 percent

AP News
Posted: Oct 27, 2011 10:56 AM
Eni 3Q profit rises 3 percent

Eni SpA, Italy's largest natural gas and oil company, on Thursday reported third-quarter net profit rose 3 percent as production setbacks in Libya offset higher prices.

Net profit for the quarter that ended Sept. 30 was euro1.77 billion ($2.47 billion), compared with euro1.72 billion in the same period a year earlier, Eni said in a statement.

Eni said oil and natural gas production was down 13.6 percent to 1.47 million barrels of oil equivalent a day due to interruptions in Libya caused by conflict. Eni restarted both natural gas and oil production in Libya at the end of the quarter.

"The recovery of our activity in Libya has enabled us to slightly reduce our estimates of the negative impact of the crisis," Chief Financial Officer Alessandro Bernini told a conference call.

CEO Paolo Scaroni called the results "excellent," citing the quick restart of production in Libya and the discovery of natural gas in Mozambique, the biggest in the company's history. Eni shares were trading up 3.3 percent to euro16.58.

The Rome-based company said adjusted net profit, which excludes changes in the value of inventories and special items, was up 5 percent to euro1.79 billion from euro1.7 billion a year earlier.

Eni reopened the Greenstream natural gas pipeline connecting Libya and Italy on Oct. 13 after eight months of being idle, with the goal of resuming export to Italy. Eni said at the time that it planned to run tests of 3 million cubic meters worth of gas a day during the preliminary phase, which Libyan officials said would last until late November at the earliest.

"The environment in Libya has been progressively stabilizing recently," Eni said Thursday.

Eni said there had been no damage to production plants and transportation facilities in the country, and forecast that oil production will flow to pre-crisis levels in about a year, while gas production will return to normal in a few months.

Before full-scale civil war erupted in February, Eni was producing 273,000 barrels of oil equivalent per day in Libya.

"Eni and the Libyan counterparts confirmed the validity of the existing petroleum contracts," Eni said.

Greenstream transported 9 billion cubic meters worth of gas a year to Italy before fighting in Libya forced Eni to shut down the pipeline in February. That's about 12 percent of Italy's annual needs.

On the oil side, Eni has reached full production at Libya's Abu-Attifel oil field with 70,000 barrels a day. Production restarted in late September at around 40,00 barrels a day.

Eni has been active in Libya, a former Italian colony, since 1959 and is the largest foreign player there in terms of hydrocarbon production.

Earlier Thursday, Eni said the gas discovery off the coast of Mozambique is 50 percent larger than previous announced.

Eni now expects to find a total of 22.5 trillion cubic feet of gas in the Mamba South 1, Area 4, due to the discovery of a new pool. Earlier it has said that the well would yield 15 trillion cubic feet.

Eni said it will later move to drill the Mamba North 1 well, located about 22 kilometers (14 miles) north of the current discovery.

Analysts had already said that the 15 trillion cubic feet was a "significant" discovery, making Mozambique an important regional liquefied natural gas producer.

During the quarter, Eni also signed agreements with Russia's Gazprom to secure investment for the giant Samburgskoye gas field in Siberia, and a preliminary agreement with GDP to acquire a 10.4 percent interest in the Elgin/Franklin field in the UK section of the North Sea where Eni already operates.

Gazprom also has reaffirmed its interest in acquiring half of Eni's 33.3 percent stake in the Elephant oil field in Libya.