ENI S.p.A. 6-K 2007
AND EXCHANGE COMMISSION
REPORT OF FOREIGN
For the month of October 2007
Mattei 1 - 00144 Rome, Italy
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F x Form 40-F o
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2b under the Securities Exchange Act of 1934.)
Yes o No x
(If Yes is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): )
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorised.
Date: October 31, 2007
Eni and NOC
establish the foundations
Tripoli, October 16, 2007 - Eni and NOC today signed a wide-ranging agreement, which represents a further step in the consolidation of their long-lasting strategic partnership which began in 1959.
This agreement will boost Enis growth in gas and oil production in Libya, ensuring greater energy security for Italy and enabling Eni to develop some of Libyas most prolific basins in the long term. The agreement also confirms Eni as the leading foreign operator in the country and further consolidates the good relationship between Italy and Libya.
In a highly competitive framework, NOC and Eni agreed to convert the existing petroleum contracts to the most recent contractual model (EPSA IV), with a renewed duration of 25 years from January 2008, well beyond the present expiry dates. The new expiry dates set by the agreement are 2042 for production of oil and 2047 for gas.
Having recently completed two major hydrocarbon developments in the country, El Feel (Elephant) and Western Libya Gas Project, Eni and NOC have now defined a new plan of strategic initiatives aimed at exploiting the significant oil and gas potential in Libya.
In particular, the parties will focus their efforts on maximising the recovery of their existing oil fields through enhanced programs by applying the most advanced technology for the assisted recovery of hydrocarbons (CO2 injection and water alternate gas). They will also implement a new drilling campaign at nearby fields.
NOC and Eni will continue to explore the prolific NC41 offshore area, and strengthen the hub of Mellitah by expanding gas export capacity from 8 to 16 billion cubic meters/year. The expansion will be achieved through the upgrading of the GreenStream export line by 3 billion cubic meters/year, which will increase export capacity to Italy, and by the construction of a new LNG plant of 5 billion cubic meters/year for worldwide marketing. Further additional gas production will be made available for industrial use in Libya.
The overall investment associated with the agreed work programs is in the range of US$28 billion over 10 years.
Eni has been present in Libya since 1959 and is currently the major foreign operator in the country, with total average daily operated production in excess of 550,000 boepd (Eni equity of around 250,000 boepd). Eni is operator in some of the countrys biggest fields: the oil fields of Abu-Attifel, El Feel and Bouri, and the gas and condensate fields of Bahr Essalam and Wafa which supply the Mellitah treatment plant and the GreenStream export line.
Press Office: +39 02.52031875 - +39 06.5982398
ENI ANNOUNCES RESULTS FOR THE
San Donato Milanese, October 31, 2007 - Eni, the international oil and gas company, today announces its group results for the third quarter and the first nine months of 2007 (unaudited).
Paolo Scaroni, Chief Executive Officer, commented:
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Third quarter of 2007
First nine months of 2007
Operational highlights and trading environment
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Third quarter of 2007
First nine months of 2007
Strategic agreement with the Libyan National Oil Company
The two partners estimated that the planned initiatives will involve expenditures of approximately $28 billion over 10 years. This deal further strengthens Enis competitive position in Libya, reaffirming its leadership among the international oil companies engaged in this Country.
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Status of the Kashagan Project
Galp Energia plans to exercise its call option on
downstream oil activities in Spain and Portugal
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Enis expenditures on capital and exploration projects in 2007 are expected to amount to approximately euro 10.5 billion, including expenditures for developing acquired upstream assets, representing a 35% increase on 2006. Approximately 86% of this capital expenditure programme is expected to be deployed in the Exploration & Production, Gas & Power and Refining & Marketing divisions. Furthermore, acquisitions of assets and interests amounting to euro 9.2 billion are forecast for 2007, of which euro 3.73 billion relate to the acquisition of ex-Yukos assets; euro 4.5 billion relate to the purchase of proved and unproved oil and gas properties in the Gulf of Mexico and onshore Congo, and euro 0.4 billion relate to the purchase of refining and marketing assets in the Central-Eastern Europe. If Gazprom exercises its call options to purchase a 20% interest in OAO Gazprom Neft held by Eni and a 51% interest in the three Russian gas companies held according to a 60% interest by Eni, net cash outflows used in investing activities will decrease to euro 16.5 billion. On the basis of expected cash outflows for planned capital expenditures, acquisitions, and shareholders remuneration, while assuming a $55/barrel scenario for the Brent crude oil, Eni foresees its leverage to settle in the low or high end of the 0.3 to 0.4 range by the end of the year, depending on the exercising of the above mentioned call options by Gazprom.
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Enis Chief Financial Officer, Marco Mangiagalli in
his position as manager responsible for the preparation of
financial reports, certifies pursuant to Article 154-bis
paragraph 2 of Legislative Decree No. 58/1998, that data and
information disclosed in this press release correspond to the
companys evidence and accounting books and entries.
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Eni Press Office
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This press release and Enis Report on Group Results
for the third quarter of 2007 (unaudited) are also available on
the Eni web site: www.eni.it.
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Summary result for the third quarter and first nine months of 2007
Trading environment indicators
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Third quarter of 2007
Enis adjusted net profit amounted to euro 1,892 million, down 27.8% from the third quarter 2006. Adjusted net profit is arrived at by excluding an inventory holding gain of euro 165 million and special gains of euro 89 million net, resulting in a downward adjustment to reported net profit (down euro 254 million). Special gains related to the divestment of interests in certain affiliates in the Engineering & Construction division, which were partly offset by environmental charges and provisions for redundancy incentives.
Results by division
The decline in the Group adjusted net profit was a result of:
These declines in the adjusted net profit were partly offset by higher adjusted net profit in the Engineering & Construction division (up euro 57 million; up 48.7%), due to an improved operating performance (up euro 66 million) relating to favorable demand trends in oilfield services.
First nine months of 2007
Enis adjusted net profit amounted to euro 6,792 million, down 15.7% from the first nine months of 2006. Adjusted net profit is arrived at by excluding an inventory holding gain of euro 275 million and special charges of euro 66 million net, resulting in a downward adjustment to reported net profit (down euro 209 million).
Return on Average Capital Employed (ROACE) calculated on an adjusted basis for the twelve-month period ending September 30, 2007 was 19.5% (23.9% for the twelve-month period ending September 30, 2006). If Gazprom exercises its call options to purchase a 20% interest in OAO Gazprom Neft held by Eni and a 51% interest in the three Russian gas companies held according to a 60:40 interest by Eni and Enel as of September 30, 2007, the Group ROACE would stand at 20.1%.
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Results by division
These declines in the adjusted net profit were partly offset by a higher adjusted net profit reported in the:
Net borrowings and cash flow
Net borrowings as of September 30, 2007 increased by euro 2,308 million from June 30, 2007. The main cash outflows related to: (i) the purchase of oil and gas assets in the Gulf of Mexico (euro 3.5 billion) and downstream oil assets (euro 0.2 billion); (ii) expenditures for the third quarter on capital and exploration projects totalling euro 2,679 million; (iii) the repurchase of own shares for euro 147 million. These outflows were partly offset by net cash provided by operating activities of euro 3,366 million in the third quarter and by cash from divestments for euro 455 million.
Leverage, the ratio of net borrowings to shareholders equity including minority interest increased to 0.26 from 0.16 at December 31, 2006.
Repurchase of own shares
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Expenditure on capital and exploratory projects
The Board of Directors resolved that Praoil SpA (Eni SpA 100%)
is to be merged into Eni SpA according to the scheme approved by
the same Board on September 20, 2007.
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Exploration & Production
Adjusted operating profit for the third quarter of 2007 was euro 3,309 million, a decrease of euro 786 million from the third quarter of 2006, or 19.2%, due primarily to:
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Oil and gas realizations in dollars increased by 4.2% due to
higher liquid realizations as compared to the marker Brent which
benefited from narrowing differentials between heavy and light
crude recorded in the third quarter, partly offset by lower gas
realizations, related to the time lags in indexation mechanisms.
Adjusted net profit of euro 4,428 million declined by euro
1,547 million, down 25.9% from first nine months of 2006 due to a
weaker operating performance and an increase in the adjusted tax
rate (from 52.7% to 56%) due to a change in the fiscal regime of
Algeria enacted in the second half of 2006.
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Gas & Power
Adjusted operating profit for the third quarter
of 2007 was euro 581 million, representing a decline of euro 38
million from the third quarter 2006, or 6.1%. This was mainly due
to a decline in gas selling margins from an unfavorable trading
environment due mainly to different reference periods for the
energy parameters to which natural gas purchase and selling
prices are contractually indexed. This trend was particularly
significant in the thermoelectric segment. In addition, selling
margins to wholesalers declined due to the current scheme for the
indexation of the raw material component in tariffs.
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Adjusted operating profit for the first nine months of 2007 increased by euro 170 million to euro 2,783, up 6.5%, notwithstanding the occurrence of unusually mild winter weather conditions resulting in lower volumes sold of natural gas by consolidated subsidiaries (down 2.16 bcm, or 3.5%). Despite this negative impact, divisional results were driven by:
In the first nine months the impact of the trading environment
on gas selling margins yielded a decline in operating results
compared to the first nine months of 2006, owing to the
unfavorable trends recorded in the third quarter.
NATURAL GAS SALES BY MARKET
In the third quarter of 2007, natural gas sales of 19.74 bcm, including own consumption, sales by affiliates and upstream sales in Europe grew by 0.84 bcm from the third quarter of 2006, up 4.4%. Main increases in sales were recorded in:
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These increases were offset in part by lower supplies to
Italian importers (down 1.20 bcm) essentially due to lower
supplies of Libyan gas and the expiration of a supply contract
with Promgas. Also, volumes produced in the North Sea declined by
These decreases were offset in part by sales growth achieved
in target markets in the rest of Europe (up 2.07 bcm),
particularly in Spain (up 0.98 bcm), Turkey (up 0.85 bcm),
Northern Europe (up 0.41 bcm) and France (up 0.35 bcm) where
market share gains were recorded.
Other performance indicators
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization charges) on an adjusted basis is calculated by adding amortization and depreciation charges to adjusted operating profit on a pro forma basis. This performance indicator, which is not a GAAP measure under either IFRSs or U.S. GAAP, includes:
Management also evaluates performance in Enis Gas & Power division on the basis of this measure taking account of the evidence that this division is comparable to European utilities in the gas and power generation sector. This measure is provided with the intent to assist investors and financial analysts in assessing the Eni Gas & Power divisional performance as compared to its European peers, as EBITDA is widely used as the main performance indicator for utilities.
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Refining & Marketing
In the third quarter 2007, the Refining & Marketing division reported an adjusted operating profit of euro 119 million, down euro 244 million, or 67.2% compared to the third quarter of 2006. This decline reflected a weaker operating performance delivered by the refining business, as a result of an unfavorable trading environment
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due to the narrowing of price differentials between light and
heavy crude qualities that penalized complex throughputs by
reducing the competitive advantage to process low-cost feedstock
and the appreciation of the euro over the dollar. These effects
were partially offset by better refinery yields.
The adjusted net profit for the first nine months of 2007 was
euro 345 million, down euro 169 million, or 32.9%.
In the first nine months of 2007 refining throughputs on
Enis own account (27.74 mmtonnes) decreased by 50 ktonnes
due to the expiration of a processing contract at the Priolo
refinery as described above. Excluding this effect, refining
throughputs in Italy increased by one million tonnes, or 4%, to
24.38 mmtonnes reflecting better performance at the Livorno and
Milazzo, Gela and Venice refineries owing to lower downtime,
partially offset by decreases at the Sannazzaro and Taranto
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In the first nine months of 2007, sales of refined products
decreased by 1.68 mmtonnes from the first nine months of 2006, to
36.27 mmtonnes, down 4.4%. This was due to lower volumes sold to
oil companies and traders in Italy, lower sales of feedstock to
the petrochemical sector as a result of the expiration of a
processing contract at the Priolo refinery and lower sales on the
wholesale market in Italy.
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Summarized group profit and loss account
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Reconciliation of reported operating profit and reported net profit to results on an adjusted basis
Management evaluates Group and business performance on the
basis of adjusted operating profit and adjusted net profit, which
are arrived at by excluding inventory holding gains or losses and
special items. Further, finance charges on finance debt, interest
income, gains or losses deriving from evaluation of certain
derivative financial instruments at fair value through profit or
loss as they do not meet the formal criteria to be assessed as
hedges under IFRS, and exchange rate differences are excluded
when determining adjusted net profit of each business segment.
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Analysis of special items
Adjusted operating profit by division
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Summarized Group balance sheet
Summarized group balance sheet aggregates the amount of assets
and liabilities derived from the statutory balance sheet in
accordance with functional criteria which consider the enterprise
conventionally divided into the three fundamental areas focusing
on resource investments, operations and financing. Management
believes that this summarized group balance sheet is useful
information in assisting investors to assess Enis capital
structure and to analyze its sources of funds and investments in
fixed assets and working capital. Management uses the summarized
group balance sheet to calculate key ratios such as return on
capital employed (ROACE) and the proportion of net borrowings to
shareholders equity (leverage) intended to evaluate whether
Enis financing structure is sound and well-balanced.