Eni SpA (NYSE:E) Q1 2016 Earnings Conference Call - Final Transcript
Apr 29, 2016 • 08:00 am ET
Good afternoon ladies and gentlemen, and welcome to Eni's 2016 First Quarter Results Conference Call hosted by Massimo Mondazzi, Chief Financial and Risk Management Officer. [Operator Instructions]. I'm now handing you over to your host to begin today's conference. Thank you.
Thank you very much. Good afternoon, and welcome to our first quarter results presentation. Economic result and cash flow are presented, as we did at the end of 2015, on a standalone basis. This means that Versalis is excluded both in 2015 and 2016 and Saipem is excluded in 2015 and equity accounted in the first quarter of 2016.
In this quarter, we continued to perform in line with our strategy, progressing in all our businesses and delivering positive operating results in each of them. In particular, in E&P we achieved, as planned, the start-up of Goliat in Norway, Heidelberg in US, Mpungi in block 15/06 in Angola and Meleiha Deep in Egypt. These, together with the contribution from ramp ups, contributed to a volume growth of 3.4% versus first quarter of 2015, or 1.3% net of PSA effects.
Development activities are progressing well. We confirm all the start-ups we planned this year including Kashagan, which is expected on stream within the last quarter of this year. Talking about Zohr, after the final investment decision taken in February, we are preparing the fourth well, whilst speeding up the award of the main construction contracts, both on and offshore.
As for exploration, we drilled three successful wells and other positive results are expected in the second quarter. In terms of guidance, we are very well on track to exceed the yearly guidance of 400 million [Phonetic] BOE of additional resources at a cost of around EUR900 million or less.
In Mid-downstream, all segments were profitable, achieving around EUR350 million of EBIT thanks to in Gas & Power, a good quarter in a weak scenario, that confirms the turnaround pace of this business that was driven by the improved competitiveness of our gas contracts and a good result in retail. In Refining & Marketing, good performances in both refining and marketing, the former confirming the expected 2016 breakeven at the margin of $4.5 per barrel. Overall, the Company generated an operating cash flow of EUR1.3 billion at a very depressed scenario of $34 Brent, and kept the leverage almost flat at 23%.
Before entering into the performance of the quarter, I would like to focus once more on our upstream portfolio, taking advantage of our peers group complete set of numbers already issued either through the 10-K or 20-F files. The specific subject is the disclosure named standardized measure of discounted future net cash flows. The results value disclosure, together with its comparison with the peer group, provide some very powerful information about expected cash inflow, outflow and net value of the different portfolios. And when the scenario drops dramatically, as it did in 2015, the variations give a comprehensive view of portfolio resilience and reflect the action taken to cope with