Italian oil company Eni expects to produce more oil and gas this year as new projects come onstream, it said on Wednesday, after higher output helped it soften the blow of lower crude prices in its first-quarter results.
The benchmark Brent crude oil price averaged $55 a barrel in the quarter, down by almost half from a year ago.
Adjusted net profit in the three months fell 46 percent to 648 million euros ($722 million) but the result easily topped what the company said was the analysts’ consensus forecast of 460 million euros.
Besides the higher production volumes, the impact of lower oil prices were also partly offset by investment income, improved long-term gas supply contracts and better refining margins,
BP and Total also reported better than expected results on Tuesday due to steep increases in profits from refining cheaper oil.
State-controlled Eni, the biggest foreign oil producer in Africa, is also looking to reshape its business and focus increasingly on exploration and production rather than the downstream refining and marketing operations.
The company is seeking to sell 8 billion euros worth of assets by 2019 to help boost its cash flow, including reducing stakes in prize exploration acreage like Mozambique and the Congo.
“There are discussions under way on exploration assets and we are confident one of them could be sold this year,” Chief Financial Officer Massimo Mondazzi said.
In step with other rivals Exxon Mobil Corp., Royal Dutch Shell and BP, Eni has also committed to cutting its costs and will reduce investments by 17 percent by 2018 to help boost cash.
In the first three months of the year Eni’s production increased by 7.2 percent to 1.7 million barrels of oil equivalent (boe) per day and the outlook is for output to be higher this year than in 2014.
“There were higher volumes in Africa where, with falling crude prices, the company was able to recoup bigger volumes from its production-sharing agreements,” a London-based analyst said.
Output this year will be boosted by new field start-ups and a ramp-up of production in new projects in Angola, Congo, Egypt, Venezuela and the United States. The company also expects higher volumes in conflict-torn Libya.
“We are still producing an average of around 300,000 barrels per day in Libya,” said chief upstream officer Antonio Vella in a conference call.
Eni, which used to produce around 280,000 boe per day of oil and gas in Libya before the downfall of Muammar Gaddafi, has been able to keep its plants running since much of the gas it produces is used for domestic power generation.
Eni’s shares closed down 1.5 percent while the Stoxx Europe 600 oil and gas sector index was down 1.8 percent.