Eni in US$7.9 billion asset disposal

In an effort to restructure and transform, Eni’s 2016-2019 strategic plan is aimed for a competitive cost structure, which includes a total of US$7.9 billion (€7 billion) of disposed assets by 2019, in addition to an efficient operating model, and a flexible asset portfolio to face the complex challenges in the industry. 

Image from Eni.

"In 2015, we achieved 90% of the previous 4-year plan disposal target. We have now increased our four-year target and will dispose of another 7 billion euros ($7.9 billion) of assets by 2019, mainly through the dilution of our stakes in recent and material discoveries as part of our dual exploration model strategy," Eni CEO Claudio Descalzi said.

Eni’s “disposal program” will target asset sales mainly through the dilution of high working interest stakes in recent material discoveries, in line with the company’s "dual exploration" strategy.

In the company’s upstream sector, hydrocarbon production is expected to grow by more than 3% per year across the 2016-2019 period, and will be achieved mainly through the ramp-up and start-up of new projects with a total contribution of around 800,000 boe/din 2019, Eni said

Eni anticipates that new discoveries during the period will be 1.6 billion boe. Over the last eight years, Eni has discovered 11.9 billion bbl of resources.

Eni will put focus on its high-value projects that have accelerated returns, in addition to the development of conventional projects during the four-year plan. The company is reducing its capex by 21% to about $41.7 billion.

According to the Italian giant, aside from an 18% reduction in overall upstream capex, cumulative production growth of 13% to 2019 will be achieved. Thanks to Eni’s portfolio flexibility, ongoing successful exploration strategy, synergies with existing assets and contract renegotiations, the average breakeven price of new projects has been radically reduced from $45 to $27/boe.

"We will continue to deliver strong cash generation through sustainable growth in the upstream, the completion of restructuring across the group’s other businesses, cost efficiency and flexible portfolio management. Thanks to our financial flexibility, our shareholder remuneration policy continues to be sustainable even in a lower-than-expected oil price environment," Descalzi said.