Eni’s Board of Directors have approved the Group results for the full year and the fourth quarter of 2018 (unaudited).

Commenting on the results, Claudio Descalzi, CEO of Eni, remarked:
“2018 was a strong year for Eni both financially and operationally, which was characterized by a robust fourth quarter performance. We successfully optimized our portfolio and strengthened it for the future, and we doubled operating and net profit, while the price of Brent averaged 25% higher than 2017 in euro terms. We increased cash flow from operations by 35% allowing us, after investments, to cover our €3 billion dividend while also reducing net debt by approximately the same amount to €8.3 billion. Capital expenditure continues to be stable, demonstrating our disciplined management approach.

In our Upstream division we achieved our highest ever level of production of 1.85 million barrels per day, with a cash flow per barrel of $22.5, achieving our 2022 target four years early. The proven reserves replacement ratio was once again higher than 100%, for a three‐year average of 131%. Gas & Power achieved its highest ever operating profit since the spin‐off of regulated transport and distribution activities, equal to €0.5 billion, while the performance of Refining & Marketing and Chemicals highlights the division’s progress and resilience, despite a less favorable market environment.

With a view to the future we strengthened and geographically diversified our Upstream portfolio, expanding our growth prospects with the establishment of Vår Energi in Norway and building of a significant presence in the Middle East, while keeping costs low and maintaining a high level of profitability. In Refining, the acquisition of a stake in Ruwais increased our downstream capacity by 35%, representing the most efficient and profitable option for expansion, increasing the balance of our portfolio and making it more resilient to future cyclical pressures.  

On the basis of these results, we will propose payment of a dividend of €0.83 per share at the Board of Directors' meeting to be held on 14 March.”

Exploration & Production

Record hydrocarbons production: 1.85 million boe/d for the FY, up by 2.5% from 2017 net of price effects (1.87 million boe/d in the fourth quarter, down by 1%). This performance was recorded despite a decline in gas demand in certain countries with a negative impact of approximately 1 percentage point in the year and other one-off events (mainly the termination in the second quarter of the Intisar production contract in Libya). 

Production growth was fuelled by:

• an addition of more than 300 kboe/d from production ramp-ups at highly-profitable giant projects (Zohr, Nooros, Jangkrik, OCTP oil, East Hub, Nenè phase 2) and achievement of the five start-ups planned for 2018: Ochigufu and Vandumbu in Block 15/06 in Angola, OCTP gas phase, Bahr Essalam phase 2 and Wafa Compression;
• increased production at the Kashagan, Goliat and Val d’Agri fields (the latter shutdown in 2017);
• the entry in Abu Dhabi.

Zohr: increased the production target to 3.2 bcf/d. 

New projects:

Final Investment Decisions: sanctioned the operated projects of Area 1 off Mexico, targeting development of 2.1 billion of barrels of oil equivalent in place, with the pilot project’s planned startup in 2019 and the Merakes discovery in Indonesia, leveraging on the synergy with the existing infrastructures of the Jangkrik field. Overall, in 2018, six projects were sanctioned (in addition to those previously mentioned, in Italy, Egypt, Congo and Angola).

Rovuma LNG Project in Mozambique: the co-venturers of Area 4 secured long-term agreements for the purchase of LNG volumes, an important step towards making the final investment decision of the first phase of the Rovuma LNG Project, for the construction of two LNG trains with a capacity of 7.6 million tons/year each and obtaining the project financing. 

Exploration:

• successes of the year in Egypt, Cyprus, Norway, Angola, Nigeria, Mexico and Indonesia;
• replacing portfolio of exploration leases: in the year, added approximately 29,300 Km² of new acreage mainly in Mexico, Lebanon, Alaska, Indonesia and Morocco.
• exploration resources: added 620 million boe of new resources, higher than the guidance. 

Portfolio management:

• Dual Exploration Model: signed an agreement with Qatar Petroleum for the divestment of a 35% interest in Area 1 discoveries, off Mexico. Farm-out of part of Eni’s interest in the Nour licence in Egypt to BP (25%) and Mubadala (20%); finalized asset swaps in Mexico with Lukoil.

Robust growth in the Middle East, achieving a more balanced risk profile of Eni’s upstream portfolio:

• awarded by the Abu Dhabi National Oil Company (ADNOC) a 25% interest in the Ghasha concession, a supergiant offshore gas project. Eni will retain the technical leadership with expected start-up by the end of 2022 and a projected production plateau at 1.5 bcf/d; in January 2019, Eni was awarded seven exploration licenses in onshore/offshore areas: two licenses in Abu Dhabi, one in Oman, one in the Kingdom of Bahrain and three in the Sharjah Emirate. 
• Strengthened the upstream activity in Norway: finalized the business combination between Eni Norge and Point Resources, leading to the creation of Vår Energi, an equity-accounted joint venture (Eni’s interest 69.6%) that will develop the activities of the two partners in Norway targeting a production plateau of 250 kboe/d in 2023.
• Alaska: signed a preliminary agreement to acquire a 70% interest and the operatorship of the Oooguruk oil field. Eni already owns the remaining 30% working interest. 

EXPLORATION & PRODUCTION

Production
Oil and natural gas production averaged 1,851 kboe/d in 2018, the highest level ever achieved (1,872 kboe/d in the fourth quarter of 2018). This performance was driven by ramp-ups at fields started up in 2017, mainly in Egypt, Indonesia, Angola, Congo and Ghana and the 2018 start-ups (with a total contribution of over 300 kboe/d), higher production at the Kashagan field, Goliat field in Norway and Val d’Agri in Italy, as well as the acquisition of the two Concession Agreements Lower Zakum (5%) and Umm Shaif/Nasr (10%) producing offshore in the United Arab Emirates. These positives were partly offset by negative price effects at PSAs contracts, lower-than-expected produced gas volumes due to the impact of exogenous factors in certain countries, the decline of mature fields as well as certain oneoff events (termination of the Intisar contract in Libya and unplanned shutdowns). When excluding price effects (down approximately 10 kboe/d), hydrocarbon production increased by 2.5% in the full year (down by 1.1% in the quarter).

Liquids production amounted to 887 kbbl/d in the full year of 2018 (897 kbbl/d in the fourth quarter of 2018). The ramp-ups of the period and the acquisition in the United Arab Emirates were partly offset by price effects and mature field declines.

Natural gas production amounted to 5,261 mmcf/d in the full year of 2018 (5,321 mmcf/d in the quarter). Production ramp-ups and start-ups were offset by exogenous factors in certain countries.

Reserves
Net proved reserves at December 31, 2018  increased to 7,153 mmboe. The reserves life index was 10.6 years (10.5 years in 2017). 

In 2018, net additions to proved reserves pertaining to discoveries, extensions, improved recovery, revisions of previous estimates were 673 mmboe. These increases compared to the production of the year yielded an organic reserve replacement ratio of 100% and an all sources reserve replacement ratio of 124%.

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