Eni SpA, Italy’s biggest oil company, increased its target for average annual production growth after discovering new fields from Africa to the Arctic.
Eni expects more than 4 percent growth a year through 2016, compared with a previous target of more than 3 percent, the Rome-based company said today in a statement, citing “exceptional exploration successes.” It forecasts annual expansion of more than 3 percent thereafter.
Discoveries and developments in Russia, the Barents Sea, Kazakhstan, Venezuela, the Far East and sub-Saharan Africa have helped Eni raise targets. An increase in production will enable the company to benefit from oil prices that have doubled in four years. New projects are set to boost output by more than 700,000 barrels of oil equivalent a day by 2016, the company said.
“We are focused on fast-tracking our projects,” Eni’s Head of Exploration and Production Claudio Descalzi said today in a strategy presentation. It will bring new fields on stream “in a timely and efficient manner.”
The company forecasts 56.8 billion euros ($73.8 billion) of investments through 2016, funded by cash flow from production and more than 10 billion euros of disposals, including stakes in Galp Energia SGPS SA and Snam SpA. That spending program exceeds the previous strategic plan by 1.6 billion euros.
Eni’s divestments include a stake in its African natural-gas assets. The company said today it will get $4.2 billion from the sale of a 20 percent interest in Mozambique’s Area 4 to China National Petroleum Corp. The agreement allows Eni to spread the cost of developing fields and building a liquefied natural gas plant, while cementing its relationship with Asia’s largest oil and gas company.
Eni is “not in a rush” to sell its remaining stake in Area 4, Chief Executive Officer Paolo Scaroni said today.
The company, which increased its 2013 dividend 1.9 percent to 1.10 euros a share, said it plans to adopt a progressive dividend policy and a new buyback program that will be activated at managers’ discretion. Scaroni said the company will consider a buyback should oil prices stay at current levels.
The outlook for Italy’s gas market remains “challenging” as a slowing economy damps demand, Eni said. It’s renegotiating contracts on 80 percent of supply volumes following a slump in prices. Adjusted pro-forma earnings before interest, tax, depreciation and amortization at its gas and power business will be about 1.5 billion euros in 2016, the statement shows.