Bloomberg News

Eni Profit Rises 7% as Higher Oil Prices Counter Lost Output

October 27, 2011

(Updates with Libya output forecast in fifth paragraph.)

Oct. 27 (Bloomberg) -- Eni SpA, Italy’s largest oil producer, reported better-than-estimated third-quarter earnings as higher oil prices countered lower production from Libya.

Adjusted net income rose 7 percent to 1.8 billion euros ($2.5 billion) from 1.7 billion euros a year earlier, the company said in a statement. That beat the 1.5 billion-euro average estimate of 15 analysts surveyed by Bloomberg. Output fell 14 percent to 1.47 million barrels of oil equivalent a day.

Oil producers have reported higher earnings as rallying crude prices drive up revenue. Exxon Mobil Corp. said today that net income exceeded $10 billion for a third consecutive quarter, while Royal Dutch Shell Plc said profit doubled. Brent crude averaged $112.09 a barrel in the third quarter, 46 percent higher than a year earlier.

Eni said production will fall 10 percent this year following cuts to output in Libya, where the uprising to oust Muammar Qaddafi closed oil and gas fields. Eni resumed operations in the North African country in September and said gas output will probably return to normal in the coming months, while oil production will be back to prewar levels in a year.

The Rome-based company will produce about 120,000 barrels of oil equivalent a day in Libya this quarter, Head of Exploration and Production Claudio Descalzi said on a conference call with analysts. That compares with 280,000 barrels a day before the conflict. The overall negative impact on 2011 output from the Libyan unrest will be about 190,000 barrels, he said.

Eni confirmed that no damage was reported to its Libyan facilities and its Tripoli offices have reopened.

Some of the lost Libyan production will be recovered by increasing output in areas such as Nigeria, Norway, Egypt, Angola and the U.K., Eni said. It’s also planning to start new fields in Italy, Egypt and Nigeria in the fourth quarter.

Gas revenue fell 3.4 percent in the period as margins declined amid sluggish demand and oversupply. While refining margins in the Mediterranean area are improving, they’re expected to remain at unprofitable levels, Eni said.

--Editors: Will Kennedy, Stephen Cunningham

To contact the reporter on this story: Alessandra Migliaccio in Rome at amigliaccio@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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