BAKU, Azerbaijan, April 24
By Leman Zeynalova – Trend:
Based on this macroeconomic scenario, Italy’s Eni reduced the company’s outlook for Brent crude oil prices, down to 45 $/bbl and 55 $/bbl respectively in 2020 and 2021, Trend reports referring to the company.
“Spot gas prices at the Italian hub have been reduced by 15 percent in 2020 and by 30 percent in 2021, while refining margin is expected to decline by 18 percent in 2020,” Eni said.
Eni has promptly defined its responses to the current crisis scenario by reviewing the industrial plan for the year 2020 and 2021 in order to preserve the robustness of its balance sheet. The review of the industrial plan foresees:
Capex curtailments of approximately €2.3 billion for 2020, 30 percent lower than the initial capital budget, and anticipated further reductions of €2.5-3 billion in 2021, i.e. 30 percent-35 percent lower than original plans.
Expected a production level of 1.75–1.80 mboe/d in 2020, which is lower than initial projections due to capex curtailments, COVID-19 effects, a lower global gas demand also impacted by the pandemic effects and finally extension of force majeure in Libya for the entire first half of the year. This production guidance does not take into account any possible impacts associated with the recently announced OPEC+ cuts that are to be implemented on a field-by-field basis.
Capex revisions focused in the E&P segment, with the re-phasing of a number of projects, which are nonetheless expected to resume quickly once market fundamentals improve, thus recovering any lost production volumes.
Implemented widespread initiatives to save approximately €600 million of expenses in 2020.
At management’s assumption of an average Brent price of 45 $/bbl for FY 2020, expected adjusted cash flow before working capital changes of €7.3 billion. The sensitivity of this cash flow to movements in crude oil prices is estimated at €180-190 million for each one-dollar change in the Brent crude oil prices and commensurate changes in gas prices applicable to deviation in a range of 5-10 $/bbl from the base-case scenario, also assuming no further management’s initiatives and excluding effects on dividends from equity accounted entities.
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