Eni SpA (NYSE:E) Q4 2016 Earnings Conference Call - Final Transcript
Mar 01, 2017 • 06:00 am ET
So, good morning and welcome to our 2016 Result Presentation and the Full Year Strategy Update. 2016 was a year of records for Eni in spite of a challenging scenario. We have met all of our strategic milestones in the leverage of standing results meeting our main operating targets in production, reserves and cash neutrality. We did it while enforcing strong cost efficiency, reducing CapEx by 19%, OpEx by 14%, and G&A by 10% versus 2015.
In the fourth quarter, we produced a record organic level of 1.86 million barrels per day and notwithstanding the Val d'Agri shutdown, disruption in Nigeria and initial downtime of Goliat, we achieved our average production target for the year of 1.76 million barrels per day. We set another record with the reserves replacement ratio of 193%, our best result ever, and the highest in the industry. Over the last three years, our average replacement ratio is an exceptional 115% organically.
In exploration, yet again, we had remarkable result adding 1.1 billion barrel of resources at a very low cost of $60 per barrel. In the mid-downstream, we can report that each business is now free cash positive for a cumulative of EUR2.3 billion. In operating cash flow, we generated EUR8.3 billion enabling us to reach a record of CapEx cash neutrality of $46 per barrel. Considering cash from disposals, we fully covered the cash dividend at $50 per barrel. And finally, our pro forma leverage was 24%. We are the only major that reduced its debt since the beginning of the downturn. This is a clear evidence of the effectiveness of the transformation process we carried out in the last three years.
Another record, we are very proud of it -- of is our achievement in HSE, beating our long-term trend of outstanding results. Talking about safety, in 2016, we reached a total recordable injury rate of 0.35 with a reduction of 21% versus 2015. This has been the third consecutive year that we have improved our results and beaten our targets. Emission intensity in the upstream decreased by 9% versus 2015. This confirms that we are well on track on our long-term target to reach 43% reduction in 2025 versus 2014.
Our focus on CO2 emission and reduction is mainly on three areas. For methane, emission in gas flaring reduction, as you can see on the chart, the trend are very positive. The third area is increasing use of renewable as a substitute for gas consumption in our operations, and by the end of the plan, we target the capacity of about 500 megawatts.
And now we focus on exploration, which is our center of gravity in terms of organic growth, flexibility in cost and time to market. It is an essential element to reach our profitable level of cash neutrality. Focusing on the last three years, we have found 3.4 billion barrels, of which 25% has already been transformed into proven reserves, and 25% is under disposal, and for the part disposed has