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Profile of the year

Results

In 2012 Eni reported net profit at €7.79 billion including Eni’s share of Snam results. Net profit of continuing operations amounted to €4.2 billion which excludes Snam’s contribution to Group results, reclassified as discontinued operations following the ownership unbundling finalized in October 2012.

Adjusted net profit, which excludes special items, was €7.13 billion, up by 2.7% from a year ago. It was up by 7.6% when excluding Snam’s results included in the continuing operations 1 . These results were driven by an excellent performance reported by the Exploration & Production Division on the back of a recovery in Libyan production.

Eni’s financial structure was strengthened by asset divestments amounting to approximately €6.6 billion mainly relating to the sale of significant stakes in Snam and Galp, and by the deconsolidation of Snam’s financial debt of €12.45 billion. Leverage decreased to 0.25 at December 31, 2012 from 0.46 at December 31, 2011.

Eni intends to monetize its residual interests in Snam and Galp with a market value of approximately €5 billion to further strengthen the balance sheet.

Net cash generated by operating activities from continuing operations amounted to €12.36 billion and together with the robust proceeds from divestments enabled the Company to finance capital expenditure and other investments of €13.33 billion and to pay dividends to Eni’s shareholders and other minorities for €4.38 billion, while reducing net borrowings by €12.52 billion.

  1. The Snam contribution excluded is the result of Snam transactions with Eni included in the continuing operations according to IFRS 5. Adjusted operating profit and adjusted net profit are not provided by IFRS.

Dividend

Dividendo, € per share, 2010 - 1.00, 2011 - 1.04, 2012 - 1.08

The Company’s excellent results and robust fundamentals underpin a dividend distribution of €1.08 per share, representing a 4% increase from 2011, in line with the company’s dividend policy. Management reaffirms its commitment to deliver industry leading returns to the Company’s shareholders.

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Oil and natural gas production

In 2012, Eni reported liquids and gas production at 1,701 kboe/d. On a comparable basis, a production growth rate of 7% was achieved driven by the almost complete resumption of the Company’s activities in Libya and continuing production start-ups and ramp-ups. Eni targets a production growth average rate of more than 4% on average over the next four-year period, leveraging on a strong project pipeline, a resource base at best ever levels and the Eni co-operation model.

Proved oil and natural gas reserves

Net proved oil and gas reserves

Eni’s net proved oil and gas reserves as of December 31, 2012 were at the eight-year record of 7.17 bboe. The organic reserve replacement ratio was 147% on a comparable basis. The reserve life index is 11.5 years.

Natural gas sales

Natural gas sales of 95.32 bcm were barely unchanged from 2011, excluding the volume impact caused by the loss of significant influence at Galp. In a scenario characterized by weak demand and rising competitive pressure, Eni’s marketing initiatives were focused on maintaining gas sales in Italy, boosting Eni’s presence in key European markets (France, Germany and others) and continuing expansion in the international market of LNG.

Safety

In 2012 the injury frequency rate relating to employees and contractors decreased by 12.3% and 21.1% respectively, compared to 2011. This positive trend progressed for the eighth consecutive year. Notwithstanding the 43.3% decrease in the fatality index, seven fatal accidents occurred in 2012. Eni is engaged in maintaining high level of safety in each of its activities.

Eni leads Energy for All in Sub-Saharan Africa

On November 28, 2012, during the first meeting of the Leadership Council of the Sustainable Development Solutions Network (SDSN), Eni was appointed to lead Energy for All in Sub-Saharan Africa, an initiative aimed at devising solutions for a more general access to energy in the technological, institutional, political-managerial and business expertise.

Exploration success

Exploration success

2012 was a record year for exploration at Eni with discovered resources of 3.64 bboe, about six time yearly production.

The exploration success achieved in Mozambique at the Mamba complex (Eni operator with a 70% interest) confirmed Mamba to be the largest discovery ever in Eni’s history with estimated full mineral potential of 75 tcf of gas in place. The agreement signed in December 2012 with Anadarko Petroleum Corporation for the coordinated development of offshore activities and the joint construction of onshore facilities is a crucial step towards the start of the Mozambique project, whose FID is expected in 2014.

The Skrugard and Havis oil and gas discoveries in the Barents Sea in the PL 532 prospect (Eni 30%) found a combined amount of 500 million barrels of recoverable resources (100%) and will be jointly developed in a fast and efficient way.

Appraisal activities at the Sankofa discovery in the offshore Cape Three Points licence operated by Eni (47.22% interest) in Ghana confirmed the high potential of the area estimated at around 450 million barrels of oil in place. Exploration licences have been acquired in high potential Countries such as Kenya, Liberia, Vietnam, Cyprus and offshore Russia and in shale gas plays in Ukraine as well as in other established areas such as China, Pakistan, Indonesia and Norway.

Business developments

Business developments

The Authorities of Venezuela sanctioned the full field development plan of the giant Perla gas project, located in Cardón IV Block (Eni 50%) offshore the Gulf of Venezuela. Production plateau is estimated at 1,200 mmcf/d.

In Libya onshore exploration restarted within an exploration campaign that will last through 2013 marking another forward step in the full recovery of upstream activities in the Country.

The Green Refinery project was launched, which targets the conversion of the Venice plant into a “bio-refinery” to produce bio-fuels leveraging on a proprietary technology.

Within its strategy of international expansion in markets with interesting growth prospects, Versalis, Eni’s chemical subsidiary, signed agreements with major chemical operators in South Korea and Malaysia to build and operate elastomers facilities based on Versalis’ proprietary technologies and know-how.

Access to CPLI

In 2012 Eni has been the only energy company to gain access to the Carbon Performance Leadership Index (CPLI) that rates the performance of industrial companies in reducing GHG emissions and mitigating the risks associated with climate change. This performance is even more significant when one considers that the energy segment is responsible for over 40% of total GHG emissions of companies included in the Global 500 Index that includes the 500 companies with highest market capitalization. In 2012, Eni was included for the sixth consecutive year in the Dow Jones Sustainability Index and in the FTSE4Good.

Eni at Rio+20

At the United Nations Conference on Sustainable Development (Rio +20), Eni took part actively in all the main events for industrial companies. Following the United Nations request, Eni confirmed its commitment in terms of reduction of gas flaring and greenhouse gas emissions, access to sustainable energy, green chemistry and fight against corruption.

Cooperation to development

Eni continues to apply its cooperation model in the host oil-rich Countries. The model integrates the traditional business of exploring and developing hydrocarbons with solutions responding to the requirements of local communities in terms of economic and social development. In 2012, Eni started up projects in Russia and Mozambique and carried out actions for improving health conditions, education and access to potable water in Congo, Nigeria, Ghana and Iraq.

Financial highlights (*)

2010 2011 2012
Net sales from operations - continuing operations (€ million) 96,617 107,690 127,220
Operating profit - continuing operations 15,482 16,803 15,026
Adjusted operating profit - continuing operations 16,845 17,230 19,753
Net profit - continuing operations (a) 6,252 6,902 4,198
Net profit - discontinued operations (a) 66 (42) 3,590
Net profit (a) 6,318 6,860 7,788
Adjusted net profit - continuing operations (a) 6,770 6,938 7,128
Net cash provided by operating activities - continuing operations 14,140 13,763 12,356
Capital expenditure - continuing operations 12,450 11,909 12,761
Dividends to Eni shareholders pertaining to the period (b) 3,622 3,768 3,913
Cash dividends to Eni shareholders 3,622 3,695 3,840
Total assets at period end 131,860 142,945 139,641
Shareholders' equity including non-controlling interest at period end 55,728 60,393 62,713
Net borrowings at period end 26,119 28,032 15,511
Net capital employed at period end 81,847 88,425 78,224
Share price at period end (€) 16.34 16.01 18.34
Number of shares outstanding at period end (million) 3,622.7 3,622.7 3,622.8
Market capitalization (c) (€ billion) 59.2 58.0 66.4

(*) Pertaining to continuing operations. Following the divestment of the Regulated Businesses in Italy, results of Snam are represented as discontinued operations throughout this Annual Report.

  1. Attributable to Eni’s shareholders.
  2. The amount of dividends for the year 2012 is based on the Board’s proposal.
  3. Number of outstanding shares by reference price at year end.

Summary financial data

2010 2011 2012
Net profit - continuing operations
- per share (a) (€) 1.72 1.90 1.16
- per ADR (a) (b) ($) 4.59 5.29 2.98
Adjusted net profit - continuing operations
- per share (a) (€) 1.87 1.92 1.97
- per ADR (a) (b) ($) 4.96 5.35 5.06
Adjusted return on average capital employed (Roace) (c) (%) 11.1 10.2 10.1
Leverage 0.47 0.46 0.25
Coverage 22.2 15.4 11.7
Current ratio 1.0 1.1 1.4
Debt coverage 56.3 51.3 80.5
Dividends pertaining to the year (€ per share) 1.00 1.04 1.08
Pay-out (%) 57 55 50
Dividend yield (d) (%) 6.1 6.6 5.9
  1. Fully diluted. Ratio of net profit from continuing operations and average number of shares outstanding in the period. Dollar amounts are converted on the basis of the average EUR/USD exchange rate quoted by ECB for the period presented.
  2. One American Depositary Receipt (ADR) is equal to two Eni ordinary shares.
  3. The Snam contribution excluded is the result of Snam transactions with Eni included in the continuing operations according to IFRS 5.
  4. Ratio of dividend for the period and the average price of Eni shares as recorded in December.

Operating and sustainability data

2010 2011 2012
Employees at period end (units) 73,768 72,574 77,838
of which - women 12,161 12,542 12,860
- outside Italy 45,967 45,516 51,034
Female managers (%) 18.0 18.5 18.9
Training hours (thousand hours) 2,949 3,127 3,132
Employees injury frequency rate (No. of accidents per million of worked hours) 0.80 0.65 0.57
Contractors injury frequency rate 0.71 0.57 0.45
Fatality index (fatal injuries per one hundred millions of worked hours) 4.77 1.94 1.10
Oil spills (barrels) 4,269 7,295 3,856
GHG emission (mmtonnes CO2 eq) 58.26 49.12 52.49
R&D expenditures (a) (€ million) 218 190 211
Expenditures for the territory (b) (€ million) 107 101 91
Exploration & Production
Net proved reserves of hydrocarbons (at year end) (kboe/d) 6,843 7,086 7,166
Average reserve life index (year) 10.3 12.3 11.5
Production of hydrocarbons (kbbl/d) 1,815 1,581 1,701
Profit per boe (c) ($/boe) 11.91 16.98 15.95
Opex per boe (c) 6.14 7.28 7.10
Cash flow per boe 25.52 31.65 32.77
Finding & Development cost per boe (d) 19.32 18.82 17.37
Gas & Power
Worldwide gas sales (e) (bcm) 97.06 96.76 95.32
- in Italy 34.29 34.68 34.78
- outside Italy 62.77 62.08 60.54
Customers in Italy (million) 6.88 7.10 7.45
Electricity sold (TWh) 39.54 40.28 42.58
Customer satisfaction index (%) 87.4 88.6 89.8
Refining & Marketing
Refinery throughputs on own account (mmtonnes) 34.80 31.96 30.01
Retail market share (%) 30.4 30.5 31.2
Retail sales of petroleum products in Europe (mmtonnes) 11.73 11.37 10.87
Service stations in Europe at year end (units) 6,167 6,287 6,384
Average throughput of service stations in Europe (kliters) 2,353 2,206 2,064
Chemicals
Production (ktonnes) 7,220 6,245 6,090
Sales of petrochemical products 4,731 4,040 3,953
Average plant utilization rate (%) 72.9 65.3 66.7
Engineering & Construction
Orders acquired (€ million) 12,935 12,505 13,391
Order backlog at year end 20,505 20,417 19,739
  1. Net of general and administrative costs.
  2. Includes investments for local communities, charities, association fees, sponsorships, payments to Eni Enrico Mattei Foundation and Eni Foundation.
  3. Related to consolidated subsidiaries.
  4. Three year average.
  5. Includes Exploration & Production natural gas sales amounting to 2.73 bcm (2.86 bcm and 5.65 bcm in 2011 and 2010, respectively).

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Eni S.p.a. - Registered Head Office
Piazzaie Enrico Mattei, 1
00144 Roma

Branches
Via Emilia, 1
e Piazza Ezio Vanoni, 1
20097 - San Donato Milanese (MI)

VAT number
n. 00905811006

Company share capital
€ 4.005.358.876,00 paid up.

Rome Company Register
Tax Identification Number. 00484960588

Mission
We are a major integrated energy company, committed to growth in the activities of finding, producing, transporting, transforming and marketing oil and gas. Eni men and women have a passion for challenges, continuous improvement, excellence and particularly value people, the environment and integrity.