Italian oil and gas giant Eni has announced it will increase production capacity at Egypt’s Zohr gas field to two billion standard cubic feet per day (bscfd) after reporting strong financial performance for the second quarter of 2018.
Eni will achieve the new production capacity target with the start-up of the fifth gas treatment unit in September this year. The fourth treatment unit was installed in “record time” according to a company statement, and increased production capacity to around 1.6 bscfd.
Eni CEO Claudio Descalzi said: “There was significant progress in our portfolio management this quarter with the creation of Vår Energi in Norway as well as the funds received for the sale of Eni’s 10% stake in the Zohr field to Mubadala. As a result, net debt fell below €10bn – the lowest level in 11 years.”
The Zohr gas field is located in the Mediterranean Sea, 120 miles from Port Said.
Eni’s positive Q2 results
For the second quarter, the company reported an adjusted net profit of €770m ($900m), up 66% quarter-on-quarter, partly due to rising production and stronger crude prices.
Descalzi said: “Eni recorded another period of strong profitability in the second quarter. In the context of a 38% rise in the price of Brent, Eni reported a 152% increase in operating profit, driven by the performance of the Exploration & Production business, which more than tripled its contribution.”
“Our cash generation also grew significantly, driven by the price of Brent and increased production levels, contributing to $20 per barrel, allowing us to confirm the lowering of our cash neutrality to $55 per barrel for 2018.”
While strong, the results fell short of analysts’ estimates. Adjusted net profit was up €460m from one year ago, but consensus estimates had predicted the figure to be closer to €1bn.
The company’s oil and gas production rose 4.6% in the first half of the year to reach 1.86 million barrels of oil and gas equivalent per day.
Descalzi added: “The gas and power segment also reported excellent results, thanks to the strong integration of the LNG business with upstream activities and the positive impact of the restructuring carried out over the last years.”
The result was boosted by Brent crude price rising to an average of $74 per barrel – the highest quarterly average since 2014.
Refining and chemicals had a weaker quarter, which the company put down to difficult trading conditions. Adjusted profits for refining fell 66% to €61m.