Eni SpA confirmed its 2019 production guidance Oct. 25 as strong upstream growth in the third quarter, underpinned by the Italian major's giant Egyptian gas field, offset faltering volumes from Indonesia and Venezuela.
Posting weaker third-quarter earnings on lower prices, Eni reaffirmed its target production range of 1.87 million barrels of oil equivalent per day to 1.88 million boe/d this year, assuming a Brent oil price of $62 per barrel.
Eni saw production growth of 5% on the year in the third quarter to 1.89 million boe/d, lifted mainly by new volumes from Egypt, Kazakhstan and Ghana as well as first production from Mexico.
Production is expected to ramp up further in the fourth quarter, Eni said, with new field startups and ramp-ups projected to add about 250,000 boe/d of new production this year.
The oil major said production growth this year will be fueled by the continued volume ramp-up at Egypt's massive Zohr gas field, the ramp-up at two Libya projects as well as planned startups offshore Mexico, Egypt, Algeria and at the Trestakk project in Norway.
"Eni has delivered robust results in the quarter," CEO Claudio Descalzi said in a statement. "I am very confident in Eni's position as I look to the near future as well as to the medium and long-term transition."
However, a scale-down in activity in Indonesia reflecting a slowdown in Asia gas demand and ongoing declines in Venezuela continues to drag on upstream growth. In the previous quarter, Eni trimmed its 2019 production growth forecast by 2% to 2.5% as a result of lower volumes from Venezuela and Indonesia.
Looking ahead, Eni remained upbeat that its volumes growth will be supported by recent acquisitions.
During the third quarter, Eni finalized the acquisition of Exxon's assets in Norway and a 20% stake in the Ruwais refinery in the United Arab Emirates, which are set to provide further growth when completed.
The two deals — expected to boost Eni's production by 100,000 bbl/d and increase its refining capacity by 35% — will further support earnings from the end of the year.
Downstream, Eni saw a recovery in its refining and marketing business, posting an adjusted operating profit of €220 million, or US$244.55 million, in the third quarter, up 54% from a year ago, on stronger refining margins and marketing earnings. Eni's standard refining margin rose to $6/bbl in the quarter from $4.50/bbl a year earlier.
Due to narrowing differentials between heavy/sour crudes and light Brent crude and to lower throughputs, Eni said its refinery breakeven margin is currently expected at $5.20/bbl in 2019; its target is $3.50/bbl for the end of 2019.
Eni reported a 44% fall in adjusted earnings for the quarter at €780 million, reflecting a $13/bbl fall in Brent oil prices and a 50% slide in European gas prices on the year.
Robert Perkins is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.