Eni Profit Falls as Lower Oil Prices Compound Production Halts

Eni SpA, Italy’s biggest oil company, said first-quarter profit fell 42 percent on falling oil prices and halts to production in Nigeria, Libya and the United Kingdom.

Adjusted net income for the quarter dropped to 1.43 billion euros ($1.85 billion) from 2.47 billion euros a year earlier, the Rome-based company said in a statement. Eni said oil and natural gas production fell 4.9 percent to 1.6 million barrels of oil a day in the period because of interruptions to production.

“We confirm our growth and profitability targets for the full year 2013, in spite of a slower first quarter,” Chief Executive Officer Paolo Scaroni said in the statement. The company said average production will grow this year thanks to new projects in areas like Algeria and Angola.

Large oil companies are being hurt by lower oil prices. Brent crude dropped 5 percent in the first quarter of this year to an average $113 a barrel, and may fall further according to Goldman Sachs Inc. which cut its forecast for average Brent prices this year to $100 from $110.

Eni was also damaged by sabotage and theft that cut production in Nigeria during the first quarter, and clashes between militia groups that halted production from Libya in March. The Elgin/Franklin field in the U.K. which hadn’t been working for a year, restarted in March, the company said.

Production also fell due to the divestment of a 10 percent stake in the Karachaganak field in Kazakhstan and the reduction of the stake in Portuguese company Galp Energia SGPS SA.

Falling prices and reduced demand also hurt the gas and power division which posted an adjusted net loss of 91 million euros from a profit of 736 million euros. Shrinking demand of oilfield services and lower margins were responsible for a 52 percent decline in the engineering and construction division’s adjusted net profit to 130 million euros.

The company said in 2013 it “expects continuing weak conditions in the European gas, refining and marketing of fuels and chemical sectors.”

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