Italy Energy Giant Eni Sees Positive Growth After Challenging Year
By Christopher Coats
Saddled by production problems and uncertainty in both Nigeria and an explosive Libya, Italy’s energy giant Eni started 2014 on shaky ground. The company began the year by posting a 4th quarter loss of $832 million, a 14% decline from last year, though slightly better than industry expectations. The reported losses came as the company received word that a corruption investigation involving Saipem, of which Eni owns a 40 percent stake, had been extended by six months. The case focuses on contracts awarded by Algeria’s state energy firm, Sonatrach, and has weighed heavily on Saipem’s performance and presence in North Africa for the last year.
Despite a rough start, Eni has emerged confident that the next two years will be positive ones thanks to a combination of cost-saving measures, new discoveries and existing projects finally coming online. Last week, company CEO Paolo Scaroni outlined a new strategy update that predicted an increase in operating cash flow of 55% by 2016-2017 and an $74 billion investment plan for the next four years.
Citing the renegotiation of gas supply contracts and the exploitation of new and existing production efforts, Scaroni painted a positive but more fiscally disciplined approach to the coming years. The update did come with some positive news for investors, including an uptick in dividend payouts, from about $1.50 to $1.53. The spending reduction and dividend increase mirror the actions of energy firms across Europe under pressure from shareholders.
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