Exploration and Production

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Key performance indicators

2010 2011 2012
Employees injury frequency rate (No. of accidents per million of worked hours) 0.72 0.41 0.28
Contractors injury frequency rate 0.48 0.41 0.36
Fatality index (No. of fatalities per 100 million of worked hours) 7.90 1.83 0.81
Net sales from operations(a) (€ million) 29,497 29,121 35,881
Operating profit 13,866 15,887 18,451
Adjusted operating profit 13,898 16,075 18,518
Adjusted net profit 5,609 6,865 7,425
Capital expenditure 9,690 9,435 10,307
Adjusted ROACE (%) 16.0 17.2 17.6
Profit per boe(b) ($/boe) 11.91 16.98 15.95
Opex per boe(b) 6.14 7.28 7.10
Cash flow per boe(d) 25.52 31.65 32.77
Finding & Development cost per boe(c) (d) 19.32 18.82 17.37
Average hydrocarbons realizations(d) 55.60 72.26 73.39
Production of hydrocarbons(d) (e) (kboe/d) 1,815 1,581 1,701
Estimated net proved reserves of hydrocarbons(d) (e) (mmboe) 6,843 7,086 7,166
Reserves life index(d) (e) (years) 10.3 12.3 11.5
Organic reserves replacement ratio net of updating the natural gas conversion factor(d) (%) 127 143 147
Employees at year end (units) 10,276 10,425 11,304
of which: outside Italy 6,370 6,628 7,371
Oil spills (bbl) 3,820 2,930 3,093
Oil spills from sabotage and terrorism 18,695 7,657 8,384
Produced water re-injected (%) 44 43 49
Direct GHG emissions (mmtonnes CO2eq) 31.20 23.59 28.46
of which: from flaring 13.83 9.55 9.46
Community investment (€ million) 72 62 59
  1. Before elimination of intragroup sales.
  2. Consolidated subsidiaries.
  3. Three-year average.
  4. Includes Eni’s share of equity-accounted entities.
  5. From July 1, 2012, Eni has updated the natural gas conversion factor from 5,550 to 5,492 standard cubic feet of gas per barrel of oil equivalent. The effect of this update on production expressed in boe was 9 kboe/d for the full-year 2012 and on the initial reserves balance as of January 1, 2012 amounted to 40 mmboe. For further information see the paragraph “Summary of significant accounting policies” in the Notes to the Consolidated Financial Statements.

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Performance of the year

  • In 2012 employees and contractors injury frequency rate declined by 31.7% and 12.2% compared to the previous year. Eni continues to promote operations aimed at ensuring high safety standards.
  • Total greenhouse gas emissions increased by 20.6% due to the recovery of activities in Libya. Greenhouse gas emissions from flaring were in line with 2011 (down 0.9%).
  • Oil spills increased in the full year (up 5.6% from accidents and up 9.5% from sabotage and terrorism) due to force majeure and security issues in Nigeria.
  • Achieved the best ever levels in re-injection of the produced water with a level of 49%. In particular, the water re-injection project at the Belayim field (Eni’s interest 100%) in Egypt reported a level equal to 99%.
  • In 2012 the E&P Division reported a record performance with an adjusted net profit amounting to €7,425 million (up 8.2% from 2011) driven by an ongoing production recovery in Libya.
  • Eni reported oil and natural gas production for the full year of 1,701 kboe/day (up 7% form 2011)1 sustained by the recovery of activities in Libya, the start-up/ramp-up of fields, particularly in Russia and Australia, and higher production in Iraq.
  • Estimated net proved reserves at December 31, 2012 was an eight-year record at 7.17 bboe based on a reference Brent price of $111 per barrel. The organic reserves replacement ratio was 147% 1 with a reserves life index of 11.5 years (12.3 years in 2011). All sources reserves replacement ratio was 107% 1.
  1. Excluding the impact of updating the natural gas conversion rate.

Exploration activity

Full year 2012 was a record for exploration, adding 3.64 bboe of discovered resources, about six times production of the year, increasing Eni’s reserves to best ever levels with rapid time-to-market and cost effectiveness. Eni’s approach in the selective development initiatives, advanced technologies and knowledge management of core basins will be the key to achieve future targets:

  • The exploration campaign executed in Mozambique in the Area 4 offshore the Rovuma basin proved the Mamba gas complex to be the largest discovery in the Company’s exploration history. Eni estimates the full mineral potential of Area 4 at 75 tcf of gas in place. The geological studies confirmed the high productivity of exploration wells. This means that this huge resource base can be exploited with a limited number of producing wells that will make the upstream project highly efficient.
  • In the Barents Sea, appraisal activities at the Skrugard discovery and the new Havis discovery showed recoverable reserves estimated at approximately 500 mmbbl at 100% in the licence PL 532 (Eni’s interest 30%).
  • In Ghana, appraisal activities at the Sankofa discovery in the Offshore Cape Three Points licence (Eni operator with a 47.22% interest) confirmed the overall potential of the discovery to be around 450 million barrels of oil in place.
  • A relevant onshore discovery in Pakistan with an estimated resource from 300 to 400 bcf of gas in place and in line with Eni’s strategy of focusing on conventional and synergic assets.
  • Onshore exploration activity in Libya was resumed by drilling the A1-108/4 exploration well that will reach a total depth of approximately 4,420 meters. This is the first well of an onshore exploration campaign that will continue in 2013, marking a relevant step in the full recovery of Eni’s upstream activity in the Country.
  • Other significant exploration successes were achieved in Egypt, Congo, Indonesia, Angola, the United States and Nigeria where synergies with existing infrastructures ensure to reduce time-to-market discovered resources.
  • Eni’s portfolio was boosted with the acquisition of new exploration acreage in high potential areas such as Kenya, Liberia, Vietnam, Cyprus, offshore Russia and shale gas in Ukraine, as well as legacy areas such as China, Pakistan, Indonesia and Norway.
  • In 2012 exploration expenditure amounted to €1,850 million (up 52.9% from 2011) to complete 60 new exploratory wells (34.1 net to Eni). The overall commercial success rate was 40% (40.8% net to Eni). In addition 144 exploratory wells drilled are in progress at year end (62 net to Eni).

Sustainability and portfolio developments

  • Signed an agreement with CNPC/Petrochina to sell 28.57% of the share capital of our subsidiary Eni East Africa, which currently owns 70% interest in Area 4 in Mozambique, for an agreed proce equal to $4,210 million. The deal is subject to approval by relevant authorities. Once finalized, CNPC indirectly acquires, through its 28.57% equity investment in Eni East Africa, a 20% interest in Area 4, while Eni will retain the 50% interest through the remaining controlling stake in Eni East Africa.
  • The international Contracting Companies of the Final Production Sharing Agreement (FPSA) of the Karachaganak field and the Republic of Kazakhstan closed a settlement agreement of all pending claims relating to the recovery of costs incurred to develop the field. The Contracting Companies divested 10% of their rights and interest in the project to Kazakhstan’s KazMunaiGas for $1 billion net cash consideration
  • ($325 million being Eni’s share). Eni’s interest in the Karachaganak project has been reduced to 29.25% from the 32.5% previously held.
  • Signed an agreement with Anadarko Petroleum Corporation establishing basic principles for the coordinated development of common offshore activities in Area 4, operated by Eni and Area 1, operated by Anadarko. Furthermore, the two companies will jointly plan and construct onshore LNG liquefaction facilities in Northern Mozambique.
  • Signed a Memorandum of Understanding with the Vietnamese national oil company PetroVietnam for the development of business opportunities in Vietnam and abroad.
  • The Consortium partners and the Authority of the Republic of Kazakhstan reached an agreement on the Amendment to the sanctioned development plan of the Kashagan field (Amendment 4) which included an update to the project schedule, a revision of investments estimate and the settlement of all pending claims relating to recoverable costs and other tax matters. The commercial production start-up is expected by the end of the first half of 2013.
  • Achieved a Memorandum of Understanding with the Authority of the Yamal-Nenets, in Russia, for implementing joint socio-economic and cultural projects in the area.
  • Developed a training program in the field of human rights for staff, in particular employed in the security area, at Eni’s subsidiaries in Congo and Angola. The activities involved about 900 employees in the Pointe Noire and Luanda area, respectively.
  • Divested production and development assets in Italy, Nigeria, Norway, the United Kingdom and offshore Gulf of Mexico confirming a selective growth approach to optimize Eni’s asset portfolio and to enhance the competitiveness of Eni’s full-cycle production costs.
  • Sanctioned by Venezuelan authorities the development plan of the Perla gas project, in Block Cardón IV (Eni’s interest 50%), in the Gulf of Venezuela. In 2012 two more phases were sanctioned to reach a plateau production of approximately 1,200 mmcf/d.
  • Made final investment decisions to develop fields, in addition to the above mentioned Perla field, in Angola, Congo and Nigeria as well as other minor projects in Italy which are expected to add 59 kboe/d in 2016.
  • Development expenditure was €8,304 million (up 12.9% from 2011) to fuel the growth of major projects in Norway, the United States, Congo, Italy, Kazakhstan, Angola and Algeria.
  • In 2012 overall R&D expenditure of the Exploration & Production Division amounted to approximately €94 million (€90 million in 2011).

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