Eni Plans Deeper Cost Cuts, Asset Sales to Weather Oil Plunge

  • Company targets 7 billion euros in new disposals by 2019
  • Sees production rising 13% by 2019; dividend confirmed

Eni SpA, Italy’s largest oil producer, plans additional asset sales valued at 7 billion euros ($7.9 billion) by 2019 and deeper cost cuts as it seeks to offset the impact of the plunge in oil prices.

The explorer targets production growth of 13 percent to 2019, while reducing upstream capital expenditure by a further 18 percent compared with last year’s plan, Rome-based Eni said in a strategy update Friday. Savings from measures including contract renegotiations and synergies with existing assets have brought down break-even costs for new projects to $27 a barrel of oil equivalent from $45, it said.

Eni and its peers are trying to adapt to the worst crude-market collapse in a generation by cutting spending. The company reported a fourth-quarter loss last month, even as oil and gas production rose to the highest in five years.

“Our industry is facing a very complex challenge: reducing costs to fulfill short-term constraints while enhancing long-term value,’’ Chief Executive Officer Claudio Descalzi said in the statement. “We are well positioned to meet this challenge through a competitive cost structure, an efficient operating model and a flexible asset portfolio.’’

Eni confirmed its 2016 dividend of 80 euro cents ($0.90) a share.