Italian company Eni saw profits drop during the first half of the year as lower oil prices and production hit revenue.
Eni posted a net profit of €1.8 billion ($2.4 billion) for the first half of the year, down 52.7% on the €3.8 billion booked during the first six months of 2012.
The fall in profits came as sales sank 6.2% to just under €59.3 billion, compared to the €63.2 billion booked during the same period a year a go.
Affecting Eni’s results was a lower contribution from the company’s exploration and production division where sales dropped 12.7% to €15.6 billion.
The overall operating profits of the exploration and production segment fell 20.6% during the first half of the year to €7.4 billion.
This came as the company achieved an average of $70.33 per barrel of oil equivalent during the first half of 2013, down 6.4% on the $75.10 per boe booked during the first half of last year.
Average liquids realisations fell 8.4% to $97.60 per barrel which offset 1.7% increase in average natural gas realisations to $7.27 per thousand cubic feet.
The fall in prices was compounded by a 2.7% drop in output during the six month period to an average of 1.62 million barrels of oil equivalent per day, compared to nearly 1.67 million boepd a year ago.
Eni attributed a 3.4% fall in liquids production to to lower output in Nigeria, planned facility downtimes, as well as mature field declines.
It also claimed lower output in Nigeria and mature field declines was largely behind the 2.4% fall in natural gas production during the first half of the year.
These factors leading to the fall in output were partly offset by the start-up and ramp-up of of projects in Russia,Egypt Algeria and Angola, as well as higher liquids production from its operations in Iraq.
Also hurting Eni’s results was the company’s remaining business divisions all posting an operating loss for the first half or 2013.
The gas and power division posted an adjusted operating loss of €663 million, compared to a profit of €618 million in the first half of 2012.
Its engineering and construction division fell to a €476 million loss in the first half of 2013, compared to a profit of €767 million a year earlier, which Eni said reflected marketing and operating difficulties whichled management to revise the margin estimates for certain large contracts under completion, against the backdrop of a deteriorating trading environment for the onshore and offshore construction businesses due to a lower level of activities driven by current macroeconomic uncertainties.
The refining an marketing business did however manage to reduce its losses by 10.9% to €326 million which it attributed to better operating performance, supported by higher prices for premium distillates.
“First half results were affected by a difficult economic situation across Italy and Europe, production interruption in Libya and Nigeria and by the fall in Saipem’s results,” Eni chief executive Paolo Scaroni said.
“We have strengthened our balance sheet through the continuing divestment of Snam and Galp. In this context I am satisfied with the operational progress achieved in the first half including six production start-ups, of the eight planned for the whole 2013, and the renegotiation of gas contracts with Sonatrach and Gazprom.”
Scaroni added that he expected a “significant improvement” in the company’s second half results.
Eni expects ouput for the year to be line with 2012 with output interruptions in Nigeria and Libya expected to be offset by the start-up of major projects and the continued ramp-up of projects which commenced production last year.
Scaroni said he would propose an interim dividend of €0.55 per share to the board of directors when they meet on 19 September.
Information from Upstream was used in this report.