Eni will post $ 3.5 billion in asset depreciation after lowering pricing outlook


MILAN (Reuters) – Italian energy company Eni said it will write off around 3.5 billion euros ($ 4 billion) of the value of its assets after assessing its long-term outlook for oil and gas prices due to the economic impact of COVID 19 corrected crisis.

FILE PHOTO: The logo of the Italian energy company Eni can be seen on a booth during the Nigeria International Petroleum Summit in Abuja, Nigeria, Feb.11, 2020. REUTERS / Afolabi Sotunde

In a statement on Monday, Eni said it would increase its long-term price assumption for Brent for 2023 from previously $ 70 to $ 60 per barrel and gas at the Italian hub from $ 7.8 to $ 5.5 per barrel Million British thermal units.

“Our revised long-term assumptions, which were achieved four months after the outbreak of the COVID-19 pandemic, reflect our current expectations for future prices and will feed into our capital allocation processes,” said Claudio Descalzi, CEO of Eni.

The move follows similar write-offs from rivals like BP and Shell as crumbling demand due to the COVID-19 crisis and transition to lower-carbon energies trigger a recalculation of reserves and assets.

Eni said it expects “after-tax impairment losses on long-term assets, including a depreciation of tax credits recognized in connection with tax loss carryforwards, of EUR 3.5 billion plus or minus 20%”.

It said it would post the write-downs, most of it on upstream assets, in its second quarter results.

It said it now forecast Brent at $ 40, $ 48 and $ 55 a barrel, respectively, from $ 45, $ 55 and $ 70 a barrel, respectively.

Earlier this year, Eni pledged to cut its greenhouse gas emissions by 80% as part of one of the most ambitious cleanups in an industry under pressure from investors to go green.

Descalzi confirmed the group’s strategy of becoming a leader in the decarbonization process despite the ongoing impact of the COVID-19 pandemic on the global economy and the group.

“We are looking at how we can accelerate our plans,” he said.

Reporting by Stephen Jewkes; Adaptation by Giles Elgood


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