Eni Sees Refining Boom Ending This Year as Net Beats Estimates

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Eni SpA expects a European refining boom, which helped Italy’s largest oil company counter lower crude prices in the first quarter, to end this year.

Adjusted net income declined 46 percent to 648 million euros ($722 million), beating the 446 million-euro average estimate of 15 analysts surveyed by Bloomberg. Production rose 7.2 percent to the equivalent of 1.7 million barrels of oil per day, the Rome-based company said on Wednesday.

“Upstream production is increasing and development plans supporting 2015-2016 production growth are in line with our forecasts,” Eni Chief Executive Officer Claudio Descalzi said in a statement. The company had to “cope with a difficult trading environment” as the oil price dropped, he said.

Oil company earnings have suffered as booming production from U.S. shale fields and a slowdown in the world economy caused a sharp fall in prices. In March, Eni became the first oil major to cut its dividend to cope with the decline in crude.

Eni reported a 72 percent drop in operating profit at its exploration and production division in the quarter.

Its refining and marketing business posted an adjusted operating profit of 121 million euros, rebounding from a 313 million-euro loss a year earlier.

Higher earnings from refining and trading helped BP Plc and Total SA beat analyst estimates in the first quarter. European refining margins jumped by the most in four years in the period.

Refining Boom

The refining-margin boom in Europe will finish toward the end of this year or early 2016, Eni Chief Financial Officer Massimo Mondazzi said on a conference call on Wednesday. Total, France’s biggest oil company, said yesterday the higher margins cannot be sustained because the region still has surplus processing capacity.

Eni’s gas and power division increased its adjusted operating income by 21 percent to 294 million euros in the period. The company said gas sales were stable compared with last year.

Production is expected to increase from 2014, helped by new field start-ups and ramp-ups in Angola, Congo, Egypt, Venezuela, Norway and the U.S., the company said. Eni also expects higher volumes in Libya.

The company plans to make a final investment decision on its gas project in Mozambique by the third quarter of this year, Chief Development Officer Roberto Casula said on the conference call. It’s in talks with a number of companies over gas sales from the project.

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