Eni — Regulatory Filings 2019

Apr 26, 2019

6-K 1 c519582_6k.htm 6-K

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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Form 6-K

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of April 2019

Eni S.p.A.

(Exact name of Registrant as specified in its charter)

Piazzale Enrico Mattei 1 — 00144 Rome, Italy

(Address of principal executive offices)

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(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F x Form 40-F ¨

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(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2b under the Securities Exchange Act of 1934.)

Yes ¨ No x

(If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): )

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Table of contents

• Press release on Eni’s first quarter 2019 results

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorised.

	Eni S.p.A.
/s/ Vanessa Siscaro
Name:	Vanessa Siscaro
Title:	Head of Corporate
	Secretary’s Staff Office

Date: April 26, 2019

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Rome April 24, 2019 Sede legale, Piazzale Enrico Mattei, 1 00144 Roma Tel. +39 06598.21 www.eni.com

Eni: first quarter 2019 results

Key operating and financial results 1

| IVQ — 2018 | | | IQ — 2019 | 2018 | %
Ch. |
| --- | --- | --- | --- | --- | --- |
| 67.76 | Brent dated | $/bbl | 63.20 | 66.76 | (5) |
| 1.141 | Average EUR/USD exchange rate | | 1.136 | 1.229 | (8) |
| 59.37 | Brent dated | €/bbl | 55.65 | 54.32 | 2 |
| 1,872 | Hydrocarbon
production | kboe/d | 1,832 | 1,867 | (2) |
| 2,992 | Adjusted operating
profit (loss) (a) | € million | 2,354 | 2,380 | (1) |
| 2,928 | of which: E&P | | 2,308 | 2,085 | 11 |
| 42 | G&P | | 372 | 322 | 16 |
| 143 | R&M
and Chemicals | | (55) | 77 | .. |
| 1,450 | Adjusted net profit
(loss) (a)(b) | | 992 | 978 | 1 |
| 0.40 | - per share (€) | | 0.28 | 0.27 | |
| 399 | Net profit (loss) (b) | | 1,092 | 946 | 15 |
| 0.11 | - per
share (€) | | 0.30 | 0.26 | |
| 3,277 | Net cash from operations
at replacement cost (c) | | 3,415 | 3,166 | 8 |
| 4,325 | Net cash from operations | | 2,097 | 2,187 | (4) |
| 2,424 | Net capital expenditure (d)(e) | | 1,847 | 1,776 | 4 |
| 8,289 | Net borrowings before lease liability
ex IFRS 16 | | 8,678 | 11,278 | (23) |
| 8,289 | Net borrowings after lease liability ex
IFRS 16 | | 14,496 | 11,278 | 29 |
| 51,073 | Shareholders' equity including non-controlling
interest | | 52,776 | 48,232 | 9 |
| 0.16 | Leverage before lease liability ex
IFRS 16 | | 0.16 | 0.23 | (30) |
| n.a. | Leverage
after lease liability ex IFRS 16 | | 0.27 | n.a. | .. |

(a) Non-GAAP measure. For further information see the paragraph "Non-GAAP measures" on page 17.

(b) Attributable to Eni's shareholders.

(c) Non-GAAP measure. Net cash provided by operating activities before changes in working capital excluding inventory holding gains or losses.

(d) Include capital contribution to equity accounted entities.

(e) Net of expenditures relating to reserves acquisition, purchase of minority interests and other non-organic items.

Today, Eni’s Board of Directors approved the Group results for the first quarter of 2019 (unaudited). Commenting on the results, Claudio Descalzi, CEO of Eni, remarked:

“ I am very pleased of the excellent industrial and financial performance delivered by Eni in IQ 2019. Particularly, in light of a substantially unchanged market scenario, the E&P business has improved its operating profit by 25% compared to the first quarter of 2018, confirming our expectations of the business growing cash generation for the full year. The results of the G&P segment also improved; the 16% increase in operating profit to €372 million puts us on the path to achieving our €500 million profit target for the full year. The performance of the Downstream R&M and Chemicals business offset the effect of weaker margins and we expect to see a broad recovery over the next nine months, particularly in oil Refining and Marketing. Overall, first quarter operations generated a cash flow of €3.42 billion, up 8% and €1.5 billion greater than the investments for the period of around €1.9 billion, which is in line with the expectations of €8 billion for the whole year. The Group confirms that it can leverage on the quality and robustness of its asset portfolio, capable of covering costs, investments and dividends at a Brent price of US$ 55, in addition to generating a cash surplus in the event of higher prices, as in current trading conditions.”

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1 Results of operations, cash flow and statement of financial position for the three-month period ended and as at March 31, 2019 included the effects of the new accounting standard IFRS 16 –Leases. Since as permitted by the standard the comparative periods have not been restated, to enable the users of this report to make a homogeneous comparison, the effect of IFRS 16 on the results of the first quarter 2019 have been disclosed with reference to the single items of the profit and loss, cash flow and statement of the financial position and as whole in the tables presented on page 15.

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Highlights

Exploration & Production

· Hydrocarbon production of the first quarter 2019: 1.83 million boe/d; down by 1.3% net of price and portfolio effects;

• q-o-q change is affected by the termination of the Intisar production contract in Libya from the third quarter of 2018 and mature fields decline. These negative effects were almost completely offset by strong organic production increases due to the ramp-up of the Zohr field and of the projects started in 2018 (overall 200 kboe/d).

· Exploration:

main successes :

• new discoveries totaled 174 mmboe:

a major oil discovery was made in the Agogo exploration permit located in Block 15/06 (Eni operator 36.8%) deep offshore Angola, with up to 650 million barrels of oil in place. Agogo is the third discovery made since the resumption of exploration activities in 2018 in Block 15/06, following Kalimba and Afoxé;

Vår Energi made an oil and gas discovery in the PL 869 licence in the Norwegian North Sea;

a gas discovery was made in the exploration permit Nour in the Egyptian Mediterranean Sea, operated by Eni (40%).

rebuilding Eni’s mineral interests portfolio :

• acquired 13 licences by Vår Energi in the Norwegian APA Round;

• acquired certain interests in two exploration blocks onshore Egypt: “South East Siwa” (Eni 100%) covering 3,013 km 2 , close to the “SW Melehia” concession and “West Sherbean” (Eni operator 50%) covering 1,535 km 2 , located in the Nile Delta close to the Nooros field;

• signed an Exploration and Production Sharing Agreement for Block A, covering 2,412 km 2 offshore Ras Al Khaimah (UAE). Eni will retain operatorship with a 90% participating interest.

· Signed agreements to divest to Qatar Petroleum :

• a 30% interest in the Tarfaya exploration license, offshore Morocco , which includes 12 exploration blocks. At the closing date, Eni will retain a 45% interest and the operatorship;

• a 25.5% interest in Block A5-A, offshore Mozambique. At the closing date, Eni will retain the operatorship with a 34% interest.

· Net capex 2 : €1.6 billion, mainly relating to new fields development and ramp-ups of fields started up in 2018. Progress at initiatives designed to increase 2019 production capacity are in line with plans.

· Adjusted operating profit of Exploration & Production : €2.31 billion, up by 11% q-o-q, a 25% increase when excluding the prior year contribution from the former subsidiary Eni Norge which was merged with Point Resources to establish Vår Energi, in operation since 1/1/2019.

Gas & Power

· LNG sales : unchanged at 2.7 billion cubic meters.

· Retail business : increasing the customer base by 6% q-o-q due to growth in the power business and the acquisition of assets in Greece. Natural gas volumes declined by 4.5% due to mild winter weather.

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2 See note (e) at page 1.

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· Adjusted operating profit G&P: €0.37 billion, up by 16% q-o-q supported by growth in both the midstream and retail businesses.

Refining & Marketing and Chemicals

· Gela green refinery : started up some production units; expected further start-ups in May and full operations in the fourth quarter of 2019.

· EST plant at the Sannazzaro refinery : accomplished the early start-up in March 2019, full start-up expected by the third quarter.

· ADNOC refinery : activities are ongoing to finalize the acquisition of the 20% interest in the third quarter of 2019.

· Adjusted operating profit R&M: substantially at breakeven thanks to the contribution of marketing activities, offsetting a weak refining scenario and the advanced maintenance standstills at refineries to counteract the scenario.

· Adjusted result of the Chemicals business: a €46 million loss, negatively affected by the unplanned shutdown at the Priolo hub, which is now in the process of restarting. Excluding this effect, results are substantially at breakeven, notwithstanding weak margins in all product lines (polymers, elastomers and styrenics).

Decarbonization and circular economy

· Started the construction of two new solar photovoltaic projects, near the gas field of Bhit in Pakistan and in the oil concession of Adam in Tunisia, respectively.

· Finalized the acquisition of a construction-ready solar photovoltaic project near Katherine, in the Northern Territory of Australia, with a targeted installed capacity of 33.7 MW.

· Constructed the Inertial Sea Wave Energy Converter at the Ravenna offshore platform , an innovative technology that will convert wave-generated energy into electricity.

· Signed an agreement between Syndial and Veritas to build a plant at Porto Marghera to transform the organic fraction of solid municipal waste (OFSMW) into bio-oil and bio-methane.

· Signed a collaboration agreement with RenOils , the Italian national vegetable and animal oils and fats Consortium, aimed at recovering used vegetable oils to produce biofuels at Eni’s biorefineries.

Group results

· Adjusted operating profit: €2.35 billion for the quarter, in line q-o-q. Excluding on a-like-for-like comparison the effect of the loss of control over Eni Norge on the 2018 results, adjusted operating profit increased by 10% or 7% excluding IFRS 16 accounting effects. Furthermore, 2019 results are negatively affected by the elimination of unrealized profit in stock amounting to €134 million (it was a positive €58 million in the IQ 2018).

· Adjusted net profit : €0.99 billion for the quarter, in line q-o-q (up by 4% excluding IFRS 16 accounting effects).

· Net profit : €1.09 billion.

· Cash flow provided by operating activities: €2.1 billion, which was negatively affected by an extraordinary payment for the settlement of an arbitration (€330 million). Excluding this payment and the positive IFRS 16 impact from the 2019 cash flow, the performance was in line with IQ 2018.

· Cash flow provided by operating activities before working capital changes at replacement cost: €3.42 billion for the quarter; €3.18 billion excluding IFRS 16 accounting effects, in line with the IQ 2018.

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· Capital expenditure and investment, net : €1.85 billion net of the purchase of reserves in Alaska and Algeria (IFRS 16 effects were immaterial).

· Net borrowings: €14.5 billion, of which around €2 billion pertaining to the share of lease liabilities attributable to joint operators in Eni-led upstream Joint Operations. Net borrowings would be €8.68 billion when excluding the overall effect of IFRS 16.

· Leverage : 0.27, or 0.24 excluding the above mentioned share of lease liabilities attributable to joint operators. Leverage would be 0.16 billion when excluding the effect of IFRS 16, unchanged compared to December 31, 2018.

Outlook 2019

Exploration & Production

Hydrocarbons production : the growth rate for 2019 is confirmed at 2.5% y-o-y, under a Brent price forecast of 62 $/bbl and net of portfolio transactions. Growth will be fuelled by continuing production ramp-up at fields started in 2018, increases at the Zohr and Kashagan fields, as well as the planned 2019 start-ups including the Area 1 oil project offshore Mexico, the Baltim SW in Egypt, the North Berkine in Algeria and Trestakk project in Norway. A yearly contribution from start-ups and ramp-ups is expected to reach approximately 250 kboe/d. Production growth vs. 2018 will accelerate from the third quarter of 2019, after the maintenance activities concentrated in the second quarter of 2019 (Kashagan and Goliat fields).

Exploration resources: confirmed the target of 600 million boe of equity additions for the year.

Gas & Power

Operating profit : expected at €500 million as guided.

LNG contracted volumes expected in line vs. 2018.

Portfolio of retail customers projected to increase due to the development of the power business.

Refining & Marketing and Chemicals

Refinery breakeven margin expected at approximately 3.5 $/bbl at the end of 2019 leveraging on the full operability of the industrial system and widening differentials between light Brent crude benchmark and high-sulphur content crudes.

Refinery throughputs on own account: seen at stable levels.

Green throughputs: expected a large increase due to the start-up of the Gela green refinery.

Retail sales of refined products seen stable.

Petrochemical production volumes and sales: expected to decline y-o-y due to the shutdown of the Priolo hub.

Group

Capex: confirmed the guidance of €8 billion for FY 2019 at the budget exchange rate of 1€=1.15 USD.

Cash flow from operations before working capital is expected at €12.8 billion at the Brent price of 62 $/bbl, PSV gas price of 266 €/kmc and the EUR/USD exchange rate of 1.15, before IFRS 16 effects.

Cash neutrality : organic capex and the dividend are expected to be fully funded by operating cash flows at the Brent scenario of 55 $/bbl before IFRS 16 effects, which would improve the target to 52 $/bbl.

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Business segments operating results

Exploration & Production

Production and prices

| IVQ — 2018 | | | IQ — 2019 | 2018 | %
Ch. |
| --- | --- | --- | --- | --- | --- |
| | Production | | | | |
| 897 | Liquids | kbbl/d | 887 | 885 | 0 |
| 5,321 | Natural
gas | mmcf/d | 5,157 | 5,358 | (4) |
| 1,872 | Hydrocarbons | kboe/d | 1,832 | 1,867 | (2) |
| | Average
realizations | | | | |
| 61.22 | Liquids | $/bbl | 58.08 | 61.17 | (5) |
| 6.11 | Natural
gas | $/kcf | 5.61 | 4.50 | 25 |
| 48.05 | Hydrocarbons | $/boe | 44.82 | 42.34 | 6 |

· In the first quarter of 2019, oil and natural gas production averaged 1,832 kboe/d, down by 1.9% from the first quarter 2018; down by 1.3% net of price and portfolio effects. Production was also affected by approximately 5.5 percentage points due to the termination of the Intisar production contract in Libya from the third quarter of 2018. Excluding that event, production performance was robust, leveraging on the ramp-up of the Zohr field and of projects started in 2018, mainly in Libya and Ghana, and on the start-up of the Vandumbu field in Angola (with an overall contribution of 200 kboe/d), as well as on growth at the Kashagan project. These positives were partly offset by planned shutdowns in Algeria, as well as declines from mature fields.

Results

| IVQ — 2018 | (€
million) | IQ — 2019 | 2018 | %
Ch. |
| --- | --- | --- | --- | --- |
| 2,426 | Operating
profit (loss) | 2,289 | 1,966 | 16 |
| 502 | Exclusion
of special items | 19 | 119 | |
| 2,928 | Adjusted
operating profit (loss) | 2,308 | 2,085 | 11 |
| 63 | Net finance
(expense) income | (124) | (56) | |
| 88 | Net income
(expense) from investments | 62 | 35 | |
| (1,521) | Income taxes | (1,175) | (1,140) | |
| 49.4 | tax rate
(%) | 52.3 | 55.2 | |
| 1,558 | Adjusted
net profit (loss) | 1,071 | 924 | 16 |
| | Results also include: | | | |
| 119 | Exploration
expenses: | 117 | 75 | 56 |
| 101 | - prospecting,
geological and geophysical expenses | 82 | 64 | |
| 18 | - write-off of unsuccessful
wells | 35 | 11 | |
| 2,265 | Capital
expenditure | 1,986 | 2,368 | (16) |

· In the first quarter of 2019, the Exploration & Production segment reported an adjusted operating profit of €2,308 million, up by 11% q-o-q, or 25% when excluding the prior year contribution from the former subsidiary Eni Norge which was merged with Point Resources to establish Vår Energi, in operation since 1/1/2019. The 25% change, approximately €0.45 billion, was mainly due to the continuing addition of barrels with higher-than-average profitability (€0.22 billion) and lower costs (€0.15 billion), as well as the IFRS 16 impact, as disclosed on page 15. The impact of the trading environment was marginal and characterized by lower Brent prices offset by the appreciation of USD/EUR exchange rate.

· Adjusted net profit (€1,071 million) increased by 16%, benefiting from an improved operating performance, higher results from equity accounted entities due to the contribution of Vår Energi’s results, as well as a 3 percentage point decrease in the adjusted tax rate, reflecting the deconsolidation of the Norwegian assets which were characterized by a higher taxation compared to the average of the oil&gas sector.

For the disclosure on business segment special charges, see page 9.

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Gas & Power

Sales

| IVQ — 2018 | | | IQ — 2019 | 2018 | %
Ch. |
| --- | --- | --- | --- | --- | --- |
| 274 | PSV | €/kcm | 222 | 239 | (7) |
| 261 | TTF | | 195 | 227 | (14) |
| 18.72 | Natural gas
sales | bcm | 21.33 | 22.44 | (5) |
| 8.85 | Italy | | 10.77 | 11.19 | (4) |
| 7.9 | Rest of Europe | | 8.00 | 9.28 | (14) |
| 1.04 | of
which: Importers in Italy | | 1.02 | 0.89 | 15 |
| 6.86 | European
markets | | 6.98 | 8.39 | (17) |
| 1.97 | Rest of World | | 2.56 | 1.97 | 30 |
| 18.72 | Worldwide
gas sales | | 21.33 | 22.44 | (5) |
| 2.40 | of
which: LNG sales | | 2.70 | 2.70 | 0 |
| 9.90 | Power
sales | TWh | 10.14 | 9.22 | 10 |

· In the first quarter of 2019, natural gas sales were 21.33 bcm, down by 5% from the first quarter of 2018. Sales in Italy were down by 4% to 10.77 bcm, due to unfavorable weather conditions that mainly affected retail sales and lower sales to hub and wholesalers, partly offset by higher sales to industrial and thermoelectric segments. Sales in European markets (6.98 bcm) decreased by 17% as result of portfolio rationalization.

· Power sales were 10.14 TWh in the first quarter of 2019, up by 10% q-o-q due to higher volumes marketed to the Italian power exchange and to the free market.

Results

| IVQ — 2018 | (€
million) | IQ — 2019 | 2018 | %
Ch. |
| --- | --- | --- | --- | --- |
| 53 | Operating
profit (loss) | 358 | 398 | (10) |
| (11) | Exclusion
of special items | 14 | (76) | |
| 42 | Adjusted
operating profit (loss) | 372 | 322 | 16 |
| (48) | - Gas
& LNG Marketing and Power | 226 | 181 | 25 |
| 90 | - Eni
gas e luce | 146 | 141 | 4 |
| 1 | Net finance
(expense) income | (9) | 3 | |
| 7 | Net income
(expense) from investments | 7 | 11 | |
| (42) | Income taxes | (105) | (121) | |
| .. | tax rate
(%) | 28.4 | 36.0 | |
| 8 | Adjusted
net profit (loss) | 265 | 215 | 23 |
| 74 | Capital
expenditure | 42 | 42 | |

· In the first quarter of 2019, the Gas & Power segment reported an adjusted operating profit of €372 million, up by 16% q-o-q mainly due to the positive contribution of the GLP business (up by €45 million). The result benefitted from management’s ability to harness the flexibilities associated with the Company’s integrated portfolio on the back of a remakable volatile market environment. These positives were partly offset by the reduced margins on LNG sales due to the global market oversupply, particularly in the Far East. Adjusted operating profit of the retail business reported an increase of €5 million driven by growth in the power business in Italy and France, as well as the strengthening of the portfolio in Greece.

· Adjusted net profit amounted to €265 million, up by 23% q-o-q.

For the disclosure on business segment special charges, see page 9.

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Refining & Marketing and Chemicals

Production and sales

| IVQ — 2018 | | | IQ — 2019 | 2018 | %
Ch. |
| --- | --- | --- | --- | --- | --- |
| 3.4 | Standard
Eni Refining Margin (SERM) | $/bbl | 3.4 | 3.0 | 14 |
| 5.10 | Throughputs in Italy | mmtonnes | 4.94 | 5.51 | (10) |
| 0.45 | Throughputs in the rest
of Europe | | 0.41 | 0.68 | (40) |
| 5.55 | Total
throughputs | | 5.35 | 6.19 | (14) |
| 89 | Average refineries utilization
rate | % | 86 | 97 | |
| 90 | Green
throughputs | ktonnes | 80 | 58 | 38 |
| | Marketing | | | | |
| 2.09 | Retail
sales in Europe | mmtonnes | 1.95 | 1.99 | (2) |
| 1.48 | Retail sales
in Italy | | 1.38 | 1.40 | (1) |
| 0.61 | Retail sales
in the rest of Europe | | 0.57 | 0.59 | (3) |
| 24.0 | Retail market
share in Italy | % | 24.1 | 24.2 | |
| 2.60 | Wholesale
sales in Europe | mmtonnes | 2.26 | 2.37 | (5) |
| 1.99 | Wholesale
sales in Italy | | 1.69 | 1.68 | 1 |
| 0.61 | Wholesale
sales in the rest of Europe | | 0.57 | 0.69 | (17) |
| | Chemicals | | | | |
| 1.20 | Sales
of petrochemical products | mmtonnes | 1.04 | 1.23 | (16) |
| 76 | Average
plant utilization rate | % | 65 | 80 | |

· In the first quarter of 2019, Eni’s Standard Refining Margin – SERM – was 3.4 $/barrel, up by 14% from the first quarter of 2018 (3 $/barrel), due to higher relative prices of products compared to the cost of the petroleum feedstock. Continuing appreciation trend of high-sulphur content crudes compared to the Brent marker.

· Eni refining throughputs on own account were 5.35 mmtonnes, down by 14% q-o-q, due to lower volumes processed at the Sannazzaro refinery as a result of the shutdowns of the cracking plants and lower utilization rates to mitigate the negative impact of the scenario, as well as to the standstills at the PCK refinery in Germany and the unavailability of the Vohburg plant (Bayernoil) following the event occurred in September 2018.

· Green throughputs processed at the Venice green refinery increased by 38% q-o-q due a favourable trading environment.

· Retail sales in Italy of 1.38 mmtonnes were substantially in line (down by 1%) compared to the first quarter of 2018, in the context of decreasing consumptions. Reduction of marketed volumes were reported in all segments, mainly in the highway stations. Eni’s retail market share was 24.1%, almost unchanged q-o-q.

· Wholesale sales in Italy were 1.69 mmtonnes, up by 1% q-o-q mainly due to higher sales of gasoil and fuel oil, as well as bitumen, thanks to effective commercial initiatives, offset by lower volumes of bunker and jet fuel.

· Retail and wholesale sales in the rest of Europe decreased by 11% q-o-q due to lower volumes marketed in Germany due to the unavailability of the Bayernoil plant and in France, partly balanced by higher volumes sold in Spain and Switzerland.

· Sales of petrochemical products of 1.04 mmtonnes decreased by 16% q-o-q mainly due to lower sales of intermediates, partly offset by higher sales in styrenic and polyethylene businesses.

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Results

| IVQ — 2018 | (€
million) | IQ — 2019 | 2018 | %
Ch. |
| --- | --- | --- | --- | --- |
| (946) | Operating
profit (loss) | 278 | 138 | .. |
| 747 | Exclusion
of inventory holding (gains) losses | (402) | (99) | |
| 342 | Exclusion
of special items | 69 | 38 | |
| 143 | Adjusted
operating profit (loss) | (55) | 77 | .. |
| 171 | - Refining
& Marketing | (9) | 18 | .. |
| (28) | - Chemicals | (46) | 59 | .. |
| 2 | Net finance
(expense) income | 4 | 12 | |
| (6) | Net income
(expense) from investments | 21 | 23 | |
| (44) | Income taxes | (11) | (45) | |
| 31.7 | tax rate
(%) | .. | 40.2 | |
| 95 | Adjusted
net profit (loss) | (41) | 67 | .. |
| 372 | Capital
expenditure | 188 | 125 | 50 |

· In the first quarter of 2019, the Refining & Marketing business reported an adjusted operating loss of €9 million (€18 million of adjusted operating profit in the first quarter of 2018) mainly due to the deteriorated trading environment for complex throughputs which was caused by narrowing differentials between high-sulphur content crudes and the light Brent crude benchmark, reflecting a shortfall in the supplies of the former. Management responded to this negative trend by reducing throughputs, making changes to refinery set-up, advancing planned maintenance at cracking units and implementing other optimizations. They also adapted products to evolving market opportunities and varied the feedstock mix. The quarterly result was helped by improving margins at simple throughputs as demonstrated by a 14% increase in the benchmark SERM margin, the appreciation of the USD over the EUR and higher margins and volumes at the green refinery plant. Marketing results were slightly down q-o-q due to lower distribution margins, particularly in Italy.

· The Chemicals business reported an adjusted operating loss of €46 million, due to the unplanned shutdown at the Priolo hub, now in the restarting phase. Excluding this impact, the result was substantially at breakeven, notwithstanding weak margins at petrochemicals commodity with the polyethylene down by 61%, the cracker margin down by 4% and other product lines down in a range of 10-20% due to continuing oversupplies and competitive pressure from cheaper products streams.

· Adjusted net loss amounting to €41 million in the first quarter of 2019 decreased by €108 million q-o-q due to lower operating performance.

For the disclosure on business segment special charges, see page 9.

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Group results

| IVQ — 2018 | (€
million) | IQ — 2019 | 2018 | %
Ch. |
| --- | --- | --- | --- | --- |
| 20,056 | Net sales from
operations | 18,540 | 17,932 | 3 |
| 1,496 | Operating profit
(loss) | 2,518 | 2,399 | 5 |
| 603 | Exclusion of inventory
holding (gains) losses | (272) | (95) | |
| 893 | Exclusion
of special items (a) | 108 | 76 | |
| 2,992 | Adjusted
operating profit (loss) | 2,354 | 2,380 | (1) |
| | Breakdown by segment: | | | |
| 2,928 | Exploration
& Production | 2,308 | 2,085 | 11 |
| 42 | Gas & Power | 372 | 322 | 16 |
| 143 | Refining &
Marketing and Chemicals | (55) | 77 | .. |
| (173) | Corporate and
other activities | (137) | (162) | 15 |
| 52 | Impact
of unrealized intragroup profit elimination and other consolidation adjustments (b) | (134) | 58 | |
| 399 | Net
profit (loss) attributable to Eni's shareholders | 1,092 | 946 | 15 |
| 428 | Exclusion of inventory
holding (gains) losses | (192) | (67) | |
| 623 | Exclusion of special
items (a) | 92 | 99 | |
| 1,450 | Adjusted
net profit (loss) attributable to Eni's shareholders | 992 | 978 | 1 |

(a) For further information see table "Breakdown of special items".

(b) Unrealized intragroup profit elimination mainly pertained to intra-group sales of commodities and services recorded in the assets of the purchasing business segment as of the end of the period.

Adjusted results

· In the first quarter of 2019, the Group’s adjusted operating profit of €2,354 million was substantially unchanged compared to the first quarter of 2018, in spite of the loss of control over Eni Norge following the Vår Energi deal. The E&P segment reported an 11% increase in operating profit (up by 25% when excluding the effect of the Vår Energi deal) underpinned by a strong underlying improvement and driven by a growing contribution of highly-profitable barrels. The G&P segment reported an adjusted operating profit of €372 million, up by 16% q-o-q also due to the monetization of the flexibilities associated with the Company’s integrated portfolio. The R&M and Chemicals performance decline was negatively affected by a largely unfavorable trading environment, mainly in refinery high-conversion cycles and in all chemical commodities’ margins, partly offset by optimization and efficiency initiatives. Furthermore, 2019 results were negatively affected by the elimination of unrealized profit in stock amounting to €134 million (it was a €58 million positive change in the IQ 2018).

Overall, the Group Ebit was negatively affected by a deteriorated scenario, the elimination of unrealized profit in stock and the effect of the Vår Energi deal, reducing Ebit by approximately €390 million, which was almost completely offset by an improved underlying performance of €310 million and the positive impact of IFRS 16 (€60 million).

· Adjusted net profit (€992 million) was unchanged q-o-q reflecting a lowered group tax rate (down by 2 percentage points) mainly due to the loss of control over the Norwegian activities in the Exploration & Production segment.

Special items

The breakdown by segment of special items of operating profit (net charges of €108 million) is the following:

· E&P : net charges of €19 million relating to the impairment of certain assets to align the book value to fair value (€12 million), an allowance for doubtful accounts to recover credits for previous years’ investments (€14 million) partly offset by a gain in connection with cost reimbursement following the divestment of an interest in the Nour field (€8 million).

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· G&P : net charges of €14 million including: (i) the effect of fair-valued commodity derivatives that lacked the formal criteria to be accounted as hedges under IFRS (gains of €121 million); (ii) the positive balance of €33 million related to derivative financial instruments used to manage margin exposure to foreign currency exchange rate movements and exchange translation differences of commercial payables and receivables; and more than offset by (iii) a charge given by the difference between the change in gas inventories accounted under the weighted-average cost method provided by IFRS and management’s own measure of inventories which moves forward at the time of inventory drawdown the margins captured on volumes in inventories above their normal levels leveraging the seasonal spread in gas prices net of the effects of the associated commodity derivatives (€103 million).

· R&M and Chemicals: net charges of €69 million including impairment losses (€17 million) regarding the write-down of capital expenditure relating to certain Cash Generating Units in the R&M business, which were impaired in previous reporting periods and continued to lack any profitability prospects, environmental provisions (€40 million), as well as provision for redundancy incentives (€2 million).

Reported results

Eni’s net profit attributable to Eni’s shareholders for the first quarter 2019 was €1,092 million compared to €946 million in the same period in 2018, up by 15%. Reported operating profit was €2,518 million, up by 5%, underpinned by a strong performance from the E&P segment, when excluding the Vår Energi deal, driven by a growing contribution of highly-profitable barrels. Furthermore, the results were supported by the revaluation of inventories of crudes and products driven by a recovery in crude oil prices from the lows seen at the end of 2018. Those increases were partly offset by lower margins at complex refineries due to narrowing price differentials between high-sulphur content crudes and the Brent benchmark, due to a shortfall in supplies of the former on the back of OPEC production cuts and supply disruptions elsewhere in Venezuela and Iran, while petrochemicals margins remained at depressed levels.

Gains from equity-accounted entities benefitted from the recognition of the E&P JV Vår Energi’s result (€33 million), an industrial investment, which is strongly aligned to the Company’s strategy of organically growing its hydrocarbons production. Finally, the improved net profit for the quarter was supported by a reduced tax rate, down by 3.7 percentage points, due to the loss of control of Eni Norge at the end of 2018, effective at January 1, 2019, as result of the business merger to establish Vår Energi.

The adoption of IFRS 16 determined a €57 million improvement in the reported operating profit due to fees for the rental of assets no longer being recognized an expense, partly offset by the recognition of the amortization of the right-of-use assets, equal to the present value of the lease liabilities. Instead, net profit decreased by €25 million as the improved operating profit was more than offset by interest charges accrued on the lease liabilities.

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Net borrowings and cash flow from operations

| IVQ — 2018 | (€
million) | IQ — 2019 | 2018 | Change |
| --- | --- | --- | --- | --- |
| 402 | Net profit (loss) | 1,095 | 948 | 147 |
| | Adjustments to reconcile net profit
(loss) to net cash provided by operating activities: | | | |
| 2,083 | - depreciation, depletion and amortization
and other non monetary items | 1,954 | 1,990 | (36) |
| (37) | - net gains on disposal of assets | (5) | (1) | (4) |
| 1,539 | - dividends, interests and taxes | 1,482 | 1,368 | 114 |
| 1,748 | Changes in working capital related to
operations | (1,590) | (1,074) | (516) |
| 115 | Dividends received by equity investments | 530 | 5 | 525 |
| (1,472) | Taxes paid | (1,153) | (884) | (269) |
| (53) | Interests (paid) received | (216) | (165) | (51) |
| 4,325 | Net cash provided by
operating activities | 2,097 | 2,187 | (90) |
| (2,787) | Capital expenditure | (2,239) | (2,541) | 302 |
| (87) | Investments | (30) | (37) | 7 |
| (114) | Disposal of consolidated subsidiaries,
businesses, tangible and intangible assets and investments | 6 | 67 | (61) |
| 203 | Other cash flow related to capital expenditure,
investments and disposals | 68 | (140) | 208 |
| 1,540 | Free cash flow | (98) | (464) | 366 |
| (46) | Borrowings (repayment) of debt related
to financing activities | (65) | (265) | 200 |
| (977) | Changes in short and long-term financial
debt | (210) | (889) | 679 |
| | Repayment of lease liabilities | (230) | | (230) |
| (4) | Dividends paid and changes in non-controlling
interests and reserves | | (1) | 1 |
| 1 | Effect of changes in consolidation, exchange
differences and cash and cash equivalent | 8 | (19) | 27 |
| 514 | NET
CASH FLOW | (595) | (1,638) | 1,043 |
| IVQ | | IQ | | |
| 2018 | (€
million) | 2019 | 2018 | Change |
| 1,540 | Free cash flow | (98) | (464) | 366 |
| | Repayment of lease liabilities | (230) | | (230) |
| (16) | Net borrowings of acquired companies | | (2) | 2 |
| (494) | Net borrowings of divested companies | | | |
| (310) | Exchange differences on net borrowings
and other changes | (61) | 105 | (166) |
| (4) | Dividends paid and changes in non-controlling
interest and reserves | | (1) | 1 |
| 716 | CHANGE IN NET
BORROWINGS BEFORE LEASE LIABILITIES | (389) | (362) | (27) |
| | IFRS 16 first application effect | (5,746) | | (5,746) |
| | Repayment of lease liabilities | 230 | | 230 |
| | New leases subscription of the period
and other changes | (302) | | (302) |
| | Change in lease liabilities | (5,818) | | (5,818) |
| 716 | CHANGE
IN NET BORROWINGS | (6,207) | (362) | (5,845) |

Net cash provided by operating activities for the first quarter 2019 was €2.10 billion.

The working capital absorbed funds because of seasonal trends in the G&P segment sales volumes and cash receipts. Furthermore, the outcome of an arbitration accrued in the financial statements 2018 required a cash settlement (€330 million).

Net cash provided by operating activities included a dividend amounting to approximately $600 million paid by the JV Vår Energi.

Adjusted net cash flow from operating activities before changes in working capital at replacement cost was €3.42 billion, up by 8% q-o-q.

Following the adoption of IFRS 16, net cash provided by operating activities improved by €189 million as a result of the reimbursement of the principal of lease fees pertaining to assets hired in connection to operating activities that are no longer part of the operating cash outflows, but are now part of the cash flow from financing activities.

Cash outflows for expenditures and investments were €2.27 billion, including the acquisition of reserves in Alaska and Algeria (€366 million) and other non organic items for €56 million.

Following the adoption of IFRS 16, these cash outflows improved by €41 million because the reimbursement of the principal of lease fees, which are incurred in relation to the hire of equipment used in connection with a capital project, is no longer recognized among cash outflows of investing activities, but is instead now part of the cash flow from financing activities.

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Overall, the free cash flow for the period benefitted from a favorable €230 million effect due to the adoption of IFRS 16.

The following table provides a reconciliation between the cash flow prepared in accordance to IFRS 16 and a cash flow adjusted measure that excludes the impact of IFRS 16.

| (€
million) — First
Quarter 2019 | After
IFRS 16 adoption | IFRS
16 impact | Before
IFRS 16 adoption |
| --- | --- | --- | --- |
| Net cash before changes
in working capital at replacement cost (a) | 3,415 | (234) | 3,181 |
| Changes in working capital
at replacement cost (a) | (1,318) | 45 | (1,273) |
| Net cash provided by
operating activities | 2,097 | (189) | 1,908 |
| Capital expenditure | (2,239) | (41) | (2,280) |
| Free cash flow | (98) | (230) | (328) |
| Cash flow from financing
activity | (440) | 230 | (210) |
| Net cash flow | (595) | | (595) |

(a) Excluding from changes in working capital as reported in the cash flow statement (-€1,590 million) the increase in stock profit due to price effect amounting to €272 million (-€1,590 million + €272 million = €1,318 million). Consistently, net cash before changes in working capital at replacement cost excludes the stock profit.

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Summarized Group Balance Sheet

| (€
million) | March
31, 2019 | Impact
of IFRS 16 adoption as of January 1, 2019 | Dec.
31, 2018 | Change |
| --- | --- | --- | --- | --- |
| Fixed
assets | | | | |
| Property, plant
and equipment | 61,795 | | 60,302 | 1,493 |
| Inventories - Compulsory
stock | 1,465 | | 1,217 | 248 |
| Right of use | 5,604 | 5,629 | | 5,604 |
| Intangible assets | 3,180 | | 3,170 | 10 |
| Equity-accounted investments
and other investments | 7,173 | | 7,963 | (790) |
| Receivables and securities
held for operating purposes | 1,367 | | 1,314 | 53 |
| Net payables related to
capital expenditure | (2,531) | | (2,399) | (132) |
| | 78,053 | 5,629 | 71,567 | 6,486 |
| Net
working capital | | | | |
| Inventories | 4,630 | | 4,651 | (21) |
| Trade receivables | 11,797 | | 9,520 | 2,277 |
| Trade payables | (12,060) | 128 | (11,645) | (415) |
| Tax payables and provisions
for, net deferred tax liabilities | (2,262) | | (1,104) | (1,158) |
| Provisions | (11,922) | | (11,886) | (36) |
| Other current assets and
liabilities | (11) | (11) | (860) | 849 |
| | (9,828) | 117 | (11,324) | 1,496 |
| Provisions
for employee post-retirements benefits | (1,178) | | (1,117) | (61) |
| Assets
held for sale including related liabilities | 225 | | 236 | (11) |
| CAPITAL
EMPLOYED, NET | 67,272 | 5,746 | 59,362 | 7,910 |
| Eni's shareholders
equity | 52,716 | | 51,016 | 1,700 |
| Non-controlling
interest | 60 | | 57 | 3 |
| Shareholders'
equity | 52,776 | | 51,073 | 1,703 |
| Net
borrowings before lease liabilities ex IFRS 16 | 8,678 | | 8,289 | 389 |
| Lease
liabilities | 5,818 | 5,746 | | 5,818 |
| - of which Eni
working interest | 3,811 | 3,717 | | 3,811 |
| - of which Joint
operators' working interest | 2,007 | 2,029 | | 2,007 |
| Net
borrowings | 14,496 | 5,746 | 8,289 | 6,207 |
| TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY | 67,272 | 5,746 | 59,362 | 7,910 |
| Leverage before
lease liability ex IFRS 16 | 0.16 | | 0.16 | |
| Leverage after
lease liability ex IFRS 16 | 0.27 | | 0.16 | 0.11 |
| Gearing | 0.22 | | 0.14 | 0.08 |

· As of March 31, 2019, fixed assets increased by €6,486 million to €78,053 million due mainly to the initial recognition of the right-of-use asset for €5,629 million following the adoption of IFRS 16. Furthermore, the increase in the line item property, plant and equipment (up by €1,493 million) reflected capex for the period (€2,239 million) partly offset by amortization, depletion, impairments and write-off (€1,938 million).

· Net working capital (-€9,828 million) increased by €1,496 million due to higher trade receivables (€2,277 million) mainly in the G&P segment reflecting seasonality.

· Shareholders’ equity (€52,776 million) increased by €1,703 million. This was due to the net profit for the period and positive foreign currency translation differences (€903 million), partly offset by the negative change in the fair value of the cash flow hedge reserve (€411 million).

· Net borrowings 3 as at March 31, 2019 was 14,496 million and increased by €6,207 million from 2018. This increase was driven by the initial recognition of the lease liabilities upon the adoption of IFRS 16, which amounted to €5,746 million and included the reclassification of €128 million for certain trade payables due in connection with the hiring of assets, which were outstanding as at January 1, 2019.

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3 Details on net borrowings are furnished on page 23.

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The effect of the adoption of IFRS 16 on the Group net borrowings totaled €2,007 million driven by lease liabilities pertaining to joint operators in Eni-led upstream unincorporated joint ventures, which will be recovered through a partner-billing process (see the paragraph Transition to IFRS 16 on page 15).

Excluding the overall impact of the adoption of IFRS 16, net borrowings is re-determined in €8,678 million, increasing by €389 million compared to December 31, 2018.

· Leverage 4 – the ratio of the borrowings to total equity - was 0.27 at March 31, 2019, due to the step up in net borrowings driven by the adoption of IFRS 16. The impact of the lease liability pertaining to joint operators in Eni-led upstream unincorporated joint ventures weighted on leverage for approximately 3 points. Excluding altogether the impact of IFRS 16, leverage would come at 0.16.

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4 Non-GAAP financial measures and other alternative performance indicators disclosed throughout this press release are accompanied by explanatory notes and tables in line with guidance provided by ESMA guidelines on alternative performance measures (ESMA/2015/1415), published on October 5, 2015. For further information, see the section “Non-GAAP measures” of this press release. See pages 17 and subsequent.

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Other information, basis of presentation and disclaimer

This press release on Eni’s results of the first quarter of 2019 has been prepared on a voluntary basis according to article 82-ter, Regulations on issuers (Consob Regulation No. 11971 of May 14, 1999 and subsequent amendments and inclusions). The disclosure of results and business trends on a quarterly basis is consistent with Eni’s policy to provide the market and investors with regular information about the Company’s financial and industrial performances and business prospects considering the reporting policy followed by oil&gas peers who are communicating results on quarterly basis.

Results and cash flow are presented for the first quarter of 2019 and of 2018 as well as the fourth quarter of 2018. Information on the Company’s financial position relates to end of the periods as of March 31, 2019 and December 31, 2018.

Accounts set forth herein have been prepared in accordance with the evaluation and recognition criteria set by the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and adopted by the European Commission according to the procedure set forth in Article 6 of the European Regulation (CE) No. 1606/2002 of the European Parliament and European Council of July 19, 2002. Except for the adoption of IFRS 16 described below, these criteria are unchanged from the 2018 Annual Report on Form 20-F filed with the US SEC on April 5, 2019, which investors are urged to read, excepted for the adoption of IFRS 16.

Transition to IFRS 16

Effective January 1 2019, Eni has adopted the new accounting standard “IFRS 16 – Leases”, which has replaced IAS 17. IFRS 16 defines a lease as a contract that conveys to the lessee the right to control the use of an identified asset for a period of time in exchange for consideration. The new IFRS eliminates the classification of leases as either operating leases or finance leases for the preparation of lessees’ financial statements.

On initial application, Eni elected to adopt the modified retrospective approach, by recognizing the cumulative effect of initially applying the new standard as an adjustment to the opening balance at January 1, 2019, without restating the comparative information. Furthermore, management opted to not reassess each contract existing at January 1, 2019, by applying IFRS 16 to all contracts previously identified as leases (under IAS 17 and IFRIC 4), while not applying IFRS 16 to the contracts that were not previously identified as leases.

The accounting of the new standard applies to all leases that have a lease term of more than 12 months and requires:

• in the balance sheet , to recognize a right-of-use asset, that represents a lessee’s right to use an underlying asset (RoU asset), and a lease liability, that represents the lessee’s obligation to make the contractual lease payments;

• in the profit and loss account , to recognize, within operating costs, the depreciation charges of the right-of-use asset and, within finance expense, the interest expense on the lease liability, if not capitalized, rather than recognizing the operating lease payments within operating costs under IAS 17, effective until year 2018. The depreciation charges of the right-of-use asset and the interest expense on the lease liability directly attributable to the construction of an asset are capitalized as part of the cost of such asset and subsequently recognised in the profit and loss account through depreciation, impairments or write-off, mainly in the case of exploration assets. Moreover, the profit and loss account will include: (i) the lease expenses relating to short-term leases or leases of low-value assets, as allowed under the simplified approach provided for by IFRS 16; and (ii) the variable lease payments that are not included in the measurement of the lease liability (e.g., payments based on the use of the underlying asset);

• in the statement of cash flows , to recognize cash payments for the principal portion of the lease liability within the net cash used in financing activities and interest expenses within the net cash provided by operating activities, if they are recognized in the profit and loss account, or within the net cash used in investing activities if they are capitalized as referred to leased assets that are used for the construction of other assets. Consequently, compared with the requirements of IAS 17 related to operating leases, the adoption of IFRS 16 was determined a significant impact in the statement of cash flows, by determining: (a) an improvement of the net cash provided by operating activities, which no longer includes the operating lease payments, not capitalized, but only includes the cash payments for the interest portion of the lease liability that are not capitalised; (b) an improvement of the net cash used in investing activities, which no longer includes capitalized lease payments, but only includes cash payments for the capitalized interest portion of the lease liability; and (c) a worsening in the net cash used in financing activities, which includes cash payments for the principal portion of the lease liability.

Activities in the Exploration & Production segment are often carried out through unincorporated joint operations, managed by one of the partners (the operator), which has the responsibility to carry out the operations and the approved work programmes. When the operator enters into a lease contract as the sole signatory, the operator manages the lease contract, makes lease payments to the lessor and recovers the share of lease expenses pertaining to the joint operators through a partner billing process. On this regard, the indications of the IFRS Interpretations Committee (hereinafter also the IFRIC) issued in September 2018 apply, which were confirmed at its March 2019 meeting. In particular, the IFRIC indicated that, in the case of unincorporated joint operations, the operator recognises the entire lease liability, as, by signing the contract, it has primary responsibility for the liability towards the third-party supplier. Therefore, if, based on the contractual provisions and any other relevant facts and circumstances, Eni has primary responsibility, it recognises in the balance sheet: (i) the entire lease liability and (ii) the entire RoU asset, unless there is a sublease with the joint operators. On the other hand, if the lease contract is signed by all the partners of the venture, Eni recognises its share of the RoU asset and lease liability based on its working interest. If Eni does not have primary responsibility for the lease liability, it does not recognise any RoU asset or lease liability related to the lease contract.

Follows the impact of the IFRS 16 adoption on Eni’s consolidated financial statements:

| | First
Quarter 2019 | | |
| --- | --- | --- | --- |
| | Profit
and loss account | | |
| (€
million) | before
IFRS 16 | IFRS
16 effects | GAAP
results |
| Purchases, services and other | (13,668) | 252 | (13,416) |
| Depreciation, Depletion and
Amortization | (1,672) | (195) | (1,867) |
| Operating profit | 2,461 | 57 | 2,518 |
| Finance expense and income taxes | (2,747) | (82) | (2,829) |
| Net
profit | 1,120 | (25) | 1,095 |

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| | January
1, 2019 | | |
| --- | --- | --- | --- |
| | Balance
Sheet | | |
| (€
million) | before
IFRS 16 opening balance | IFRS
16 effects | GAAP
results |
| Fixed assets | 71,567 | 5,629 | 77,196 |
| Net working capital | (11,324) | 117 | (11,207) |
| Net borrowings | 8,289 | 5,746 | 14,035 |
| Shareholders' equity | 51,073 | | 51,073 |
| Leverage | 0.16 | | 0.27 |

| | First
Quarter 2019 | | |
| --- | --- | --- | --- |
| | Cash
Flow | | |
| (€
million) | before
IFRS 16 | IFRS
16 effects | GAAP
results |
| Cash Flow From Operations (FFO) | 1,908 | 189 | 2,097 |
| Capital expenditure | (2,280) | 41 | (2,239) |
| Free Cash Flow (FCF) | (328) | 230 | (98) |
| Cash Flow From Financing, net
(CFFF) | (210) | (230) | (440) |
| Net Cash Flow | (595) | | (595) |

Further details are furnished in the note N.4 “Accounting principles recently enacted” of the Notes to the Consolidated Financial Statements included in the Annual Report on Form 20-F.

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Non-GAAP financial measures and other alternative performance indicators disclosed throughout this press release are accompanied by explanatory notes and tables in line with guidance provided by ESMA guidelines on alternative performance measures (ESMA/2015/1415), published on October 5, 2015. For further information, see the section “Alternative performance measures (Non-GAAP measures)” of this press release.

Eni’s Chief Financial Officer, Massimo Mondazzi, in his position as manager responsible for the preparation of the Company’s financial reports, certifies that data and information disclosed in this press release correspond to the Company’s evidence and accounting books and records, pursuant to rule 154-bis paragraph 2 of Legislative Decree No. 58/1998.

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Disclaimer

This press release, in particular the statements under the section “Outlook”, contains certain forward-looking statements particularly those regarding capital expenditure, development and management of oil and gas resources, dividends, allocation of future cash flow from operations, future operating performance, gearing, targets of production and sales growth, new markets and the progress and timing of projects. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors, including the timing of bringing new fields on stream; management’s ability in carrying out industrial plans and in succeeding in commercial transactions; future levels of industry product supply; demand and pricing; operational issues; general economic conditions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; development and use of new technology; changes in public expectations and other changes in business conditions; the actions of competitors and other factors discussed elsewhere in this document. Due to the seasonality in demand for natural gas and certain refined products and the changes in a number of external factors affecting Eni’s operations, such as prices and margins of hydrocarbons and refined products, Eni’s results from operations and changes in net borrowings for the quarter of the year cannot be extrapolated on an annual basis.

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Company Contacts

Press Office: +39.0252031875 - +39.0659822030

Freephone for shareholders (from Italy): 800940924

Freephone for shareholders (from abroad): +80011223456

Switchboard: +39-0659821

ufficio.stampa@eni.com

segreteriasocietaria.azionisti@eni.com

investor.relations@eni.com

website: www.eni.com

---

Eni

Società per Azioni Roma, Piazzale Enrico Mattei, 1

Share capital: €4,005,358,876 fully paid.

Tax identification number 00484960588

Tel.: +39 0659821 - Fax: +39 0659822141

This press release for the first quarter of 2019 (unaudited) is also available on Eni’s website eni.com.

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Alternative performance measures (Non-GAAP measures)

Management evaluates underlying business performance on the basis of Non-GAAP financial measures, not determined in accordance with IFRS (“Alternative performance measures”), such as adjusted operating profit and adjusted net profit, which are arrived at by excluding from reported operating profit and net profit certain gains and losses, defined special items, which include, among others, asset impairments, gains on disposals, risk provisions, restructuring charges and, in determining the business segments’ adjusted results, finance charges on finance debt and interest income (see below). In determining adjusted results, also inventory holding gains or losses are excluded from base business performance, which is the difference between the cost of sales of the volumes sold in the period based on the cost of supplies of the same period and the cost of sales of the volumes sold calculated using the weighted average cost method of inventory accounting as required by IFRS, except in those business segments where inventories are utilized as a lever to optimize margins. Management is disclosing Non-GAAP measures of performance to facilitate a comparison of base business performance across periods, and to allow financial analysts to evaluate Eni’s trading performance on the basis of their forecasting models.

Non-GAAP financial measures should be read together with information determined by applying IFRS and do not stand in for them. Other companies may adopt different methodologies to determine Non-GAAP measures. Follows the description of the main alternative performance measures adopted by Eni. The measures reported below refer to the performance of the reporting periods disclosed in this press release:

Adjusted operating and net profit

Adjusted operating and net profit are determined by excluding inventory holding gains or losses, special items and, in determining the business segments’ adjusted results, finance charges on finance debt and interest income. The adjusted operating profit of each business segment reports gains and losses on derivative financial instruments entered into to manage exposure to movements in foreign currency exchange rates, which impact industrial margins and translation of commercial payables and receivables. Accordingly, also currency translation effects recorded through profit and loss are reported within business segments’ adjusted operating profit. The taxation effect of the items excluded from adjusted operating or net profit is determined based on the specific rate of taxes applicable to each of them. Finance charges or income related to net borrowings excluded from the adjusted net profit of business segments are comprised of interest charges on finance debt and interest income earned on cash and cash equivalents not related to operations. Therefore, the adjusted net profit of business segments includes finance charges or income deriving from certain segment operated assets, i.e., interest income on certain receivable financing and securities related to operations and finance charge pertaining to the accretion of certain provisions recorded on a discounted basis (as in the case of the asset retirement obligations in the Exploration & Production segment).

Inventory holding gain or loss

This is the difference between the cost of sales of the volumes sold in the period based on the cost of supplies of the same period and the cost of sales of the volumes sold calculated using the weighted average cost method of inventory accounting as required by IFRS.

Special items

These include certain significant income or charges pertaining to either: (i) infrequent or unusual events and transactions, being identified as non-recurring items under such circumstances; (ii) certain events or transactions which are not considered to be representative of the ordinary course of business, as in the case of environmental provisions, restructuring charges, asset impairments or write ups and gains or losses on divestments even though they occurred in past periods or are likely to occur in future ones; or (iii) exchange rate differences and derivatives relating to industrial activities and commercial payables and receivables, particularly exchange rate derivatives to manage commodity pricing formulas which are quoted in a currency other than the functional currency. Those items are reclassified in operating profit with a corresponding adjustment to net finance charges, notwithstanding the handling of foreign currency exchange risks is made centrally by netting off naturally-occurring opposite positions and then dealing with any residual risk exposure in the exchange rate market. As provided for in Decision No. 15519 of July 27, 2006 of the Italian market regulator (CONSOB), non-recurring material income or charges are to be clearly reported in the management’s discussion and financial tables. Also, special items allow to allocate to future reporting periods gains and losses on re-measurement at fair value of certain non-hedging commodity derivatives and exchange rate derivatives relating to commercial exposures, lacking the criteria to be designed as hedges, including the ineffective portion of cash flow hedges and certain derivative financial instruments embedded in the pricing formula of long-term gas supply agreements of the Exploration & Production segment.

Leverage

Leverage is a Non-GAAP measure of the Company’s financial condition, calculated as the ratio between net borrowings and shareholders’ equity, including non-controlling interest. Leverage is the reference ratio to assess the solidity and efficiency of the Group balance sheet in terms of incidence of funding sources including third-party funding and equity as well as to carry out benchmark analysis with industry standards.

Gearing

Gearing is calculated as the ratio between net borrowings and capital employed net and measures how much of capital employed net is financed recurring to third-party funding.

Adjusted net cash before changes in working capital

Adjusted net cash is defined as net cash provided from operating activities before changes in working capital at replacement cost and excluding certain non-recurring charges.

Free cash flow

Free cash flow represents the link existing between changes in cash and cash equivalents (deriving from the statutory cash flows statement) and in net borrowings (deriving from the summarized cash flow statement) that occurred from the beginning of the period to the end of period. Free cash flow is the cash in excess of capital expenditure needs. Starting from free cash flow it is possible to determine either: (i) changes in cash and cash equivalents for the period by adding/deducting cash flows relating to financing debts/receivables (issuance/repayment of debt and receivables related to financing activities), shareholders’ equity (dividends paid, net repurchase of own shares, capital issuance) and the effect of changes in consolidation and of exchange rate differences; (ii) changes in net borrowings for the period by adding/deducting cash flows relating to shareholders’ equity and the effect of changes in consolidation and of exchange rate differences.

Net borrowings

Net borrowings is calculated as total finance debt less cash, cash equivalents and certain very liquid investments not related to operations, including among others non-operating financing receivables and securities not related to operations. Financial activities are qualified as “not related to operations” when these are not strictly related to the business operations.

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Reconciliation tables of Non-GAAP results to the most comparable measures of financial performance

determined in accordance to GAAPs

| (€
million) — First
Quarter 2019 | Exploration
& Production | Gas
& Power | Refining
& Marketing and Chemicals | Corporate
and other activities | Impact
of unrealized intragroup profit elimination | GROUP |
| --- | --- | --- | --- | --- | --- | --- |
| Reported
operating profit (loss) | 2,289 | 358 | 278 | (143) | (264) | 2,518 |
| Exclusion
of inventory holding (gains) losses | | | (402) | | 130 | (272) |
| Exclusion
of special items: | | | | | | |
| environmental charges | | | 40 | | | 40 |
| impairment losses (impairment
reversals), net | 12 | | 17 | 2 | | 31 |
| net gains on disposal of
assets | (3) | | (2) | | | (5) |
| risk provisions | | | | | | |
| provision for redundancy
incentives | 1 | | 2 | 3 | | 6 |
| commodity derivatives | | (121) | (4) | | | (125) |
| exchange rate differences
and derivatives | 1 | 33 | 4 | | | 38 |
| other | 8 | 102 | 12 | 1 | | 123 |
| Special
items of operating profit (loss) | 19 | 14 | 69 | 6 | | 108 |
| Adjusted
operating profit (loss) | 2,308 | 372 | (55) | (137) | (134) | 2,354 |
| Net finance (expense)
income (a) | (124) | (9) | 4 | (143) | | (272) |
| Net income (expense) from
investments (a) | 62 | 7 | 21 | 9 | | 99 |
| Income taxes (a) | (1,175) | (105) | (11) | 68 | 37 | (1,186) |
| Tax
rate (%) | 52.3 | 28.4 | .. | | | 54.4 |
| Adjusted
net profit (loss) | 1,071 | 265 | (41) | (203) | (97) | 995 |
| of
which: | | | | | | |
| - Adjusted net profit
(loss) of non-controlling interest | | | | | | 3 |
| - Adjusted
net profit (loss) attributable to Eni's shareholders | | | | | | 992 |
| Reported
net profit (loss) attributable to Eni's shareholders | | | | | | 1,092 |
| Exclusion of inventory
holding (gains) losses | | | | | | (192) |
| Exclusion of special items | | | | | | 92 |
| Adjusted
net profit (loss) attributable to Eni's shareholders | | | | | | 992 |

(a) Excluding special items.

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| (€
million) — First
Quarter 2018 | Exploration
& Production | Gas
& Power | Refining
& Marketing and Chemicals | Corporate
and other activities | Impact
of unrealized intragroup profit elimination | GROUP |
| --- | --- | --- | --- | --- | --- | --- |
| Reported
operating profit (loss) | 1,966 | 398 | 138 | (157) | 54 | 2,399 |
| Exclusion
of inventory holding (gains) losses | | | (99) | | 4 | (95) |
| Exclusion
of special items: | | | | | | |
| environmental charges | 18 | | 33 | | | 51 |
| impairment losses (impairment
reversals), net | | 13 | 15 | 1 | | 29 |
| impairment of exploration
projects | | | | | | |
| net gains on disposal of
assets | | | (1) | | | (1) |
| risk provisions | 65 | | | 2 | | 67 |
| provision for redundancy
incentives | 2 | 3 | 1 | | | 6 |
| commodity derivatives | | (67) | | | | (67) |
| exchange rate differences
and derivatives | 1 | (19) | 2 | | | (16) |
| other | 33 | (6) | (12) | (8) | | 7 |
| Special
items of operating profit (loss) | 119 | (76) | 38 | (5) | | 76 |
| Adjusted
operating profit (loss) | 2,085 | 322 | 77 | (162) | 58 | 2,380 |
| Net finance (expense)
income (a) | (56) | 3 | 12 | (163) | | (204) |
| Net income (expense) from
investments (a) | 35 | 11 | 23 | 3 | | 72 |
| Income taxes (a) | (1,140) | (121) | (45) | 56 | (18) | (1,268) |
| Tax
rate (%) | 55.2 | 36.0 | 40.2 | | | 56.4 |
| Adjusted
net profit (loss) | 924 | 215 | 67 | (266) | 40 | 980 |
| of
which: | | | | | | |
| - Adjusted net profit
(loss) of non-controlling interest | | | | | | 2 |
| - Adjusted
net profit (loss) attributable to Eni's shareholders | | | | | | 978 |
| Reported
net profit (loss) attributable to Eni's shareholders | | | | | | 946 |
| Exclusion of inventory
holding (gains) losses | | | | | | (67) |
| Exclusion of special items | | | | | | 99 |
| Adjusted
net profit (loss) attributable to Eni's shareholders | | | | | | 978 |

(a) Excluding special items.

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| (€
million) — Fourth
Quarter 2018 | Exploration
& Production | Gas & Power | Refining & Marketing and Chemicals | Corporate
and other activities | Impact
of unrealized intragroup profit elimination | GROUP |
| --- | --- | --- | --- | --- | --- | --- |
| Reported
operating profit (loss) | 2,426 | 53 | (946) | (233) | 196 | 1,496 |
| Exclusion
of inventory holding (gains) losses | | | 747 | | (144) | 603 |
| Exclusion
of special items: | | | | | | |
| environmental charges | | (1) | 73 | 13 | | 85 |
| impairment losses (impairment
reversals), net | 663 | (77) | 123 | 14 | | 723 |
| net gains on disposal of
assets | (19) | | | | | (19) |
| risk provisions | 9 | | 22 | (7) | | 24 |
| provision for redundancy
incentives | 18 | (1) | 2 | | | 19 |
| commodity derivatives | | 83 | 38 | | | 121 |
| exchange rate differences
and derivatives | 5 | 35 | 2 | | | 42 |
| other | (174) | (50) | 82 | 40 | | (102) |
| Special
items of operating profit (loss) | 502 | (11) | 342 | 60 | | 893 |
| Adjusted
operating profit (loss) | 2,928 | 42 | 143 | (173) | 52 | 2,992 |
| Net finance (expense)
income (a) | 63 | 1 | 2 | (214) | | (148) |
| Net income (expense) from
investments (a) | 88 | 7 | (6) | | | 89 |
| Income taxes (a) | (1,521) | (42) | (44) | 151 | (24) | (1,480) |
| Tax
rate (%) | 49.4 | 84.0 | 31.7 | | | 50.5 |
| Adjusted
net profit (loss) | 1,558 | 8 | 95 | (236) | 28 | 1,453 |
| of
which: | | | | | | |
| - Adjusted net profit
(loss) of non-controlling interest | | | | | | 3 |
| - Adjusted net profit (loss) attributable to Eni's shareholders | | | | | | 1,450 |
| Reported net profit (loss) attributable to Eni's shareholders | | | | | | 399 |
| Exclusion of inventory holding (gains) losses | | | | | | 428 |
| Exclusion of special items | | | | | | 623 |
| Adjusted net profit (loss) attributable to Eni's shareholders | | | | | | 1,450 |

(a) Excluding special items.

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Breakdown of special items

| IVQ — 2018 | (€
million) | IQ — 2019 | 2018 |
| --- | --- | --- | --- |
| 85 | Environmental charges | 40 | 51 |
| 723 | Impairment losses
(impairment reversals), net | 31 | 29 |
| (19) | Net gains on disposal
of assets | (5) | (1) |
| 24 | Risk provisions | | 67 |
| 19 | Provisions for
redundancy incentives | 6 | 6 |
| 121 | Commodity derivatives | (125) | (67) |
| 42 | Exchange rate differences
and derivatives | 38 | (16) |
| (202) | Reinstatement of Eni Norge
amortization charges | | |
| 100 | Other | 123 | 7 |
| 893 | Special
items of operating profit (loss) | 108 | 76 |
| (35) | Net
finance (income) expense | (36) | 20 |
| | of which: | | |
| (42) | - exchange rate differences
and derivatives reclassified to operating profit (loss) | (38) | 16 |
| (442) | Net
income (expense) from investments | 2 | 4 |
| | of which: | | |
| (898) | - gains on disposal
of assets | | |
| 418 | - impairment/revaluation
of equity investments | | |
| 207 | Income
taxes | 18 | (1) |
| | of which: | | |
| 210 | - net impairment
of deferred tax assets of Italian subsidiaries | | |
| (3) | - taxes on special
items of operating profit and other special items | 18 | (1) |
| 623 | Total
special items of net profit (loss) | 92 | 99 |

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Analysis of Profit and Loss account items

Net sales from operations

| IVQ — 2018 | (€
million) | IQ — 2019 | 2018 | %
Ch. |
| --- | --- | --- | --- | --- |
| 6,762 | Exploration &
Production | 5,674 | 5,473 | 4 |
| 14,760 | Gas & Power | 14,008 | 13,742 | 2 |
| 6,548 | Refining &
Marketing and Chemicals | 5,391 | 5,566 | (3) |
| 5,481 | - Refining &
Marketing | 4,441 | 4,433 | 0 |
| 1,202 | - Chemicals | 1,037 | 1,272 | (18) |
| (135) | - Consolidation
adjustments | (87) | (139) | |
| 459 | Corporate and other
activities | 367 | 361 | 2 |
| (8,473) | Consolidation adjustments | (6,900) | (7,210) | |
| 20,056 | | 18,540 | 17,932 | 3 |

Operating expenses

| IVQ — 2018 | (€
million) | IQ — 2019 | 2018 | %
Ch. |
| --- | --- | --- | --- | --- |
| 15,326 | Purchases, services and
other | 13,416 | 12,832 | 5 |
| 145 | Impairment losses (impairment
reversals) of trade and other receivables, net | 89 | 114 | (22) |
| 752 | Payroll and related costs | 774 | 844 | (8) |
| 19 | of which: provision
for redundancy incentives and other | 6 | 6 | |
| 16,223 | | 14,279 | 13,790 | 4 |

DD&A, impairments, reversals and write-off

| IVQ — 2018 | (€
million) | IQ — 2019 | 2018 | %
Ch. |
| --- | --- | --- | --- | --- |
| 1,462 | Exploration & Production | 1,603 | 1,640 | (2) |
| 105 | Gas & Power | 117 | 91 | 29 |
| 103 | Refining & Marketing
and Chemicals | 118 | 97 | 22 |
| 81 | - Refining & Marketing | 96 | 76 | 26 |
| 22 | - Chemicals | 22 | 21 | 5 |
| 16 | Corporate and other activities | 37 | 14 | .. |
| (8) | Impact of unrealized intragroup
profit elimination | (8) | (7) | |
| 1,678 | Total depreciation,
depletion and amortization | 1,867 | 1,835 | 2 |
| 723 | Impairment losses (impairment
reversals), net | 31 | 29 | 7 |
| 2,401 | Depreciation,
depletion, amortization, impairments and reversals | 1,898 | 1,864 | 2 |
| 26 | Write-off of tangible
and intangible assets | 40 | 6 | .. |
| 2,427 | | 1,938 | 1,870 | 4 |

Income (expense) from investments

| (€
million) — First
Quarter 2019 | Exploration
& Production | Gas
& Power | Refining
& Marketing and Chemicals | Corporate
and other activities | Group |
| --- | --- | --- | --- | --- | --- |
| Share of profit (loss) from equity-accounted
investments | 60 | 7 | 2 | 7 | 76 |
| Dividends | 2 | | 19 | | 21 |
| | 62 | 7 | 21 | 7 | 97 |

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Leverage and net borrowings

Leverage is a measure used by management to assess the Company’s level of indebtedness. It is calculated as a ratio of net borrowings to shareholders’ equity, including non-controlling interest. Management periodically reviews leverage in order to assess the soundness and efficiency of the Group balance sheet in terms of optimal mix between net borrowings and net equity, and to carry out benchmark analysis with industry standards.

| (€
million) | March
31, 2019 | Dec.
31, 2018 | Change |
| --- | --- | --- | --- |
| Total debt | 25,789 | 25,865 | (76) |
| - Short-term
debt | 6,664 | 5,783 | 881 |
| - Long-term
debt | 19,125 | 20,082 | (957) |
| Cash and cash equivalents | (10,254) | (10,836) | 582 |
| Securities held for trading and other
securities held for non-operating purposes | (6,759) | (6,552) | (207) |
| Financing receivables held for non-operating
purposes | (98) | (188) | 90 |
| NET BORROWINGS BEFORE
LEASE LIABILITIES | 8,678 | 8,289 | 389 |
| Lease Liabilities | 5,818 | | 5,818 |
| - of which Eni working interest | 3,811 | | 3,811 |
| - of which Joint operators' working interest | 2,007 | | 2,007 |
| Net borrowings | 14,496 | 8,289 | 6,207 |
| Shareholders' equity including non-controlling
interest | 52,776 | 51,073 | 1,703 |
| Leverage before lease
liability ex IFRS 16 | 0.16 | 0.16 | |
| Leverage
after lease liability ex IFRS 16 | 0.27 | 0.16 | 0.11 |

Pro-forma leverage

| (€
million) | Reported
measure | Lease
liabilities of Joint operators' working interest | Pro-forma
measure |
| --- | --- | --- | --- |
| Net borrowings | 14,496 | 2,007 | 12,489 |
| Shareholders' equity including non-controlling
interest | 52,776 | | 52,776 |
| Pro-forma
leverage | 0.27 | | 0.24 |

Pro-forma leverage is net of followers’ lease liabilities which are recovered through a cash call mechanism.

Net borrowings are calculated under Consob provisions on Net Financial Position (Com. no. DEM/6064293 of 2006).

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Consolidated financial statements

BALANCE SHEET

| (€
million) | March
31, 2019 | Dec.
31, 2018 |
| --- | --- | --- |
| ASSETS | | |
| Current assets | | |
| Cash and cash equivalents | 10,254 | 10,836 |
| Other financial activities
held for trading | 6,675 | 6,552 |
| Other current financial
assets | 308 | 300 |
| Trade and other receivables | 17,038 | 14,101 |
| Inventories | 4,630 | 4,651 |
| Current tax assets | 154 | 191 |
| Other current tax
assets | 524 | 561 |
| Other current assets | 2,530 | 2,258 |
| | 42,113 | 39,450 |
| Non-current assets | | |
| Property, plant and
equipment | 61,795 | 60,302 |
| Inventory - compulsory
stock | 1,465 | 1,217 |
| Right of use | 5,604 | |
| Intangible assets | 3,180 | 3,170 |
| Equity-accounted
investments | 6,239 | 7,044 |
| Other investments | 934 | 919 |
| Other financial assets | 1,289 | 1,253 |
| Deferred tax assets | 4,048 | 3,931 |
| Other non-current
assets | 834 | 792 |
| | 85,388 | 78,628 |
| Assets held for
sale | 301 | 295 |
| TOTAL
ASSETS | 127,802 | 118,373 |
| LIABILITIES AND
SHAREHOLDERS' EQUITY | | |
| Current liabilities | | |
| Short-term debt | 2,388 | 2,182 |
| Current portion of
long-term debt | 4,276 | 3,601 |
| Current portion of
long-term lease liabilities | 882 | |
| Trade and other payables | 16,567 | 16,747 |
| Income taxes payable | 544 | 440 |
| Other taxes payable | 2,493 | 1,432 |
| Other current liabilities | 4,827 | 3,980 |
| | 31,977 | 28,382 |
| Non-current liabilities | | |
| Long-term debt | 19,125 | 20,082 |
| Long-term lease liabilities | 4,936 | |
| Provisions for contingencies | 11,922 | 11,886 |
| Provisions for employee
benefits | 1,178 | 1,117 |
| Deferred tax liabilities | 4,317 | 4,272 |
| Other non-current
liabilities | 1,495 | 1,502 |
| | 42,973 | 38,859 |
| Liabilities directly
associated with assets held for sale | 76 | 59 |
| TOTAL
LIABILITIES | 75,026 | 67,300 |
| SHAREHOLDERS'
EQUITY | | |
| Non-controlling
interest | 60 | 57 |
| Eni shareholders'
equity: | | |
| Share capital | 4,005 | 4,005 |
| Retained earnings | 39,020 | 36,702 |
| Cumulative currency
translation differences | 7,508 | 6,605 |
| Other reserves | 1,672 | 1,672 |
| Treasury shares | (581) | (581) |
| Interim dividend | | (1,513) |
| Net profit (loss) | 1,092 | 4,126 |
| Total Eni shareholders'
equity | 52,716 | 51,016 |
| TOTAL
SHAREHOLDERS' EQUITY | 52,776 | 51,073 |
| TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY | 127,802 | 118,373 |

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GROUP PROFIT AND LOSS ACCOUNT

| IVQ — 2018 | (€
million) | IQ — 2019 | 2018 |
| --- | --- | --- | --- |
| | REVENUES | | |
| 20,056 | Net sales from operations | 18,540 | 17,932 |
| 65 | Other income and revenues | 261 | 135 |
| 20,121 | Total
revenues | 18,801 | 18,067 |
| | OPERATING EXPENSES | | |
| (15,326) | Purchases, services and
other | (13,416) | (12,832) |
| (145) | Impairment reversals (impairment
losses) of trade and other receivables, net | (89) | (114) |
| (752) | Payroll and related costs | (774) | (844) |
| 25 | Other
operating (expense) income | (66) | (8) |
| (1,678) | Depreciation, Depletion
and Amortization | (1,867) | (1,835) |
| (723) | Impairment reversals
(impairment losses), net | (31) | (29) |
| (26) | Write-off of tangible
and intangible assets | (40) | (6) |
| 1,496 | OPERATING
PROFIT (LOSS) | 2,518 | 2,399 |
| | FINANCE INCOME (EXPENSE) | | |
| 926 | Finance income | 1,266 | 804 |
| (976) | Finance expense | (1,545) | (1,088) |
| 2 | Net finance income (expense)
from financial assets held for trading | 62 | (6) |
| (65) | Derivative financial instruments | (19) | 66 |
| (113) | | (236) | (224) |
| | INCOME
(EXPENSE) FROM INVESTMENTS | | |
| (471) | Share of profit (loss)
of equity-accounted investments | 76 | 45 |
| 1,002 | Other gain (loss) from
investments | 21 | 23 |
| 531 | | 97 | 68 |
| 1,914 | PROFIT
(LOSS) BEFORE INCOME TAXES | 2,379 | 2,243 |
| (1,512) | Income
taxes | (1,284) | (1,295) |
| 402 | Net
profit (loss) | 1,095 | 948 |
| | attributable
to: | | |
| 399 | -
Eni's shareholders | 1,092 | 946 |
| 3 | -
Non-controlling interest | 3 | 2 |
| | Net
profit (loss) per share attributable to Eni's shareholders (€ per share) | | |
| 0.11 | - basic | 0.30 | 0.26 |
| 0.11 | -
diluted | 0.30 | 0.26 |

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COMPREHENSIVE INCOME (LOSS)

| (€
million) | IQ — 2019 | 2018 |
| --- | --- | --- |
| Net
profit (loss) | 1,095 | 948 |
| Items that
may be reclassified to profit in later periods | 609 | (1,040) |
| Currency translation differences | 903 | (1,007) |
| Change in the fair value of cash flow
hedging derivatives | (411) | (60) |
| Share of other
comprehensive income on equity-accounted entities | (2) | 11 |
| Taxation | 119 | 16 |
| Total other items of
comprehensive income (loss) | 609 | (1,040) |
| Total comprehensive
income (loss) | 1,704 | (92) |
| attributable to: | | |
| -
Eni's shareholders | 1,701 | (94) |
| -
Non-controlling interest | 3 | 2 |

CHANGES IN SHAREHOLDERS’ EQUITY

| (€
million) | |
| --- | --- |
| Shareholders' equity
at January 1, 2018 | 48,324 |
| Total comprehensive
income (loss) | 5,713 |
| Dividends paid to Eni's
shareholders | (2,953) |
| Dividends distributed
by consolidated subsidiaries | (3) |
| Other changes | (8) |
| Total changes | 2,749 |
| Shareholders'
equity at December 31, 2018 | 51,073 |
| attributable to: | |
| -
Eni's shareholders | 51,016 |
| -
Non-controlling interest | 57 |
| Shareholders' equity
at December 31, 2018 | 51,073 |
| Impact of adoption
IAS 28 | (4) |
| Shareholders' equity
at January 1, 2019 | 51,069 |
| Total comprehensive
income (loss) | 1,704 |
| Other changes | 3 |
| Total changes | 1,707 |
| Shareholders'
equity at March 31, 2019 | 52,776 |
| attributable
to: | |
| -
Eni's shareholders | 52,716 |
| -
Non-controlling interest | 60 |

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GROUP CASH FLOW STATEMENT

| IVQ — 2018 | (€
million) | IQ — 2019 | 2018 |
| --- | --- | --- | --- |
| 402 | Net
profit (loss) | 1,095 | 948 |
| | Adjustments
to reconcile net profit (loss) to net cash provided by operating activities: | | |
| 1,678 | Depreciation, depletion
and amortization | 1,867 | 1,835 |
| 723 | Impairment losses
(impairment reversals), net | 31 | 29 |
| 26 | Write-off of tangible
and intangible assets | 40 | 6 |
| 471 | Share of (profit)
loss of equity-accounted investments | (76) | (45) |
| (37) | Gains on disposal
of assets, net | (5) | (1) |
| (113) | Dividend income | (21) | (23) |
| (45) | Interest income | (34) | (43) |
| 185 | Interest expense | 253 | 139 |
| 1,512 | Income taxes | 1,284 | 1,295 |
| (817) | Other changes | 45 | 130 |
| | Changes in working
capital: | | |
| 647 | - inventories | (189) | 188 |
| 1,253 | - trade receivables | (2,158) | (1,916) |
| (63) | - trade payables | 424 | 95 |
| 15 | - provisions for
contingencies | (55) | 104 |
| (104) | - other assets
and liabilities | 388 | 455 |
| 1,748 | Cash flow from
changes in working capital | (1,590) | (1,074) |
| 2 | Net change in the
provisions for employee benefits | 47 | 35 |
| 115 | Dividends received | 530 | 5 |
| 35 | Interest received | 14 | 21 |
| (88) | Interest paid | (230) | (186) |
| (1,472) | Income taxes paid,
net of tax receivables received | (1,153) | (884) |
| 4,325 | Net
cash provided by operating activities | 2,097 | 2,187 |
| | Investing activities: | | |
| (2,640) | - tangible assets | (2,179) | (2,507) |
| (147) | - intangible assets | (60) | (34) |
| (75) | - consolidated subsidiaries
and businesses net of cash and cash equivalent acquired | | (15) |
| (12) | - investments | (30) | (22) |
| (74) | - securities | (91) | (241) |
| (97) | - financing receivables | (86) | (193) |
| 165 | - change in payables in
relation to investing activities and capitalized depreciation | 87 | (8) |
| (2,880) | Cash flow from
investing activities | (2,359) | (3,020) |
| | Disposals: | | |
| 54 | - tangible assets | 6 | 6 |
| (236) | - consolidated subsidiaries
and businesses net of cash and cash equivalent disposed of | | 32 |
| 68 | - investments | | 29 |
| 18 | - securities | 16 | 5 |
| 138 | - financing receivables | 77 | 80 |
| 7 | - change in receivables
in relation to disposals | | (48) |
| 49 | Cash flow from
disposals | 99 | 104 |
| (2,831) | Net
cash used in investing activities (*) | (2,260) | (2,916) |

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GROUP CASH FLOW STATEMENT (continued)

| IVQ — 2018 | (€
million) | IQ — 2019 | 2018 |
| --- | --- | --- | --- |
| 489 | Increase in long-term
debt | 26 | 511 |
| (878) | Repayments of long-term
debt | (381) | (1,568) |
| | Repayment of lease
liabilities | (230) | |
| (588) | Increase (decrease)
in short-term financial debt | 145 | 168 |
| (977) | | (440) | (889) |
| (4) | Dividends paid
to Eni's shareholders | | (1) |
| (981) | Net
cash used in financing activities | (440) | (890) |
| | Effect of change in consolidation
(inclusion/exclusion of significant/insignificant subsidiaries) | (1) | |
| 1 | Effect of exchange rate
changes on cash and cash equivalents and other changes | 9 | (19) |
| 514 | Net
cash flow for the period | (595) | (1,638) |
| 10,341 | Cash
and cash equivalents - beginning of the period (a) | 10,855 | 7,363 |
| 10,855 | Cash
and cash equivalents - end of the period (a) | 10,260 | 5,725 |

(a) In the first quarter of 2019, cash and cash equivalents at the begininning and end of the period include €19 million and €6 million, respectively, of cash and cash equivalents of consolidated subsidiaries held for sale that were reported in the item "Assets held for sale" in the balance sheet.

(*) Net cash used in investing activities included investments and divestments (on net basis) in held-for-trading financial assets and other investments/divestments in certain short-term financial assets. Due to their nature and the circumstance that they are very liquid, these financial assets are netted against finance debt in determing net borrowings. Cash flows of such investments were as follows:

| IVQ — 2018 | (€
million) | IQ — 2019 | 2018 |
| --- | --- | --- | --- |
| (46) | Net
cash flow from financing activities | (65) | (265) |

SUPPLEMENTAL INFORMATION

| IVQ — 2018 | (€
million) | 2018 |
| --- | --- | --- |
| | Investment of consolidated
subsidiaries and businesses | |
| 4 | Current assets | 2 |
| 89 | Non-current assets | 23 |
| (16) | Cash and cash equivalents
(net borrowings) | (1) |
| (2) | Current and non-current
liabilities | (8) |
| 75 | Net
effect of investments | 16 |
| 75 | Purchase
price | 16 |
| | less: | |
| | Cash and cash equivalents | (1) |
| 75 | Investment
of consolidated subsidiaries and businesses net of cash and cash equivalent acquired | 15 |
| | Disposal of consolidated
subsidiaries and businesses | |
| 271 | Current assets | 39 |
| 4,794 | Non-current assets | 9 |
| 767 | Cash and cash equivalents
(net borrowings) | |
| (3,309) | Current and non-current
liabilities | (16) |
| 2,523 | Net
effect of disposals | 32 |
| 115 | Reclassification of exchange
rate differences included in other comprehensive income | |
| (3,498) | Fair value of share capital
held after the sale of control | |
| 889 | Fair value of business
combination | |
| 8 | Gain (loss) on disposal | |
| 37 | Selling
price | 32 |
| | less: | |
| (273) | Cash and cash equivalents
disposed of | |
| (236) | Disposal
of consolidated subsidiaries and businesses net of cash and cash equivalent divested | 32 |

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Capital expenditure

| IVQ — 2018 | (€
million) | IQ — 2019 | 2018 | %
Ch. |
| --- | --- | --- | --- | --- |
| 2,366 | Exploration & Production | 2,068 | 2,432 | (15) |
| 136 | - acquisition of proved
and unproved properties | 366 | 712 | (49) |
| 101 | - g&g costs | 82 | 64 | 28 |
| 199 | - exploration | 143 | 65 | .. |
| 1,899 | - development | 1,467 | 1,586 | (8) |
| 31 | - other expenditure | 10 | 5 | 100 |
| 74 | Gas & Power | 42 | 42 | |
| 372 | Refining & Marketing
and Chemicals | 188 | 125 | 50 |
| 317 | - Refining & Marketing | 171 | 100 | 71 |
| 55 | - Chemicals | 17 | 25 | (32) |
| 83 | Corporate and other activities | 27 | 11 | .. |
| (7) | Impact of unrealized intragroup
profit elimination | (4) | (5) | |
| 2,888 | Capital
expenditure | 2,321 | 2,605 | (11) |
| 101 | Cash out in net cash
flow from operating activities | 82 | 64 | 28 |
| 2,787 | Cash
out in net cash flow from investment activities | 2,239 | 2,541 | (12) |

In the first quarter of 2019, capital expenditure amounted to €2,239 million (€2,541 million in the first quarter of 2018) and mainly related to:

• development activities (€1,467 million) deployed mainly in Egypt, Ghana, Nigeria, Libya, Mexico, Angola and the United Arab Emirates. The acquisition of proved and unproved reserves of €366 million relates to the acquisition of reserves in Alaska and Algeria;

• refining activity in Italy and outside Italy (€160 million) mainly aimed at reconstruction works of the EST

conversion plant at the Sannazzaro refinery, reconversion of Gela refinery into a biorefinery, maintain plants’ integrity as well as initiatives in the field of health, security and environment; marketing activity, mainly regulation compliance and stay in business initiatives in the refined product retail network in Italy and in the Rest of Europe (€11 million);

• initiatives relating to gas marketing (€38 million).

Cash-outs comprised in net cash from operating activities (€82 million) relate to geological and geophysical studies as part of the exploration activities, which are charged to expenses.

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Exploration & Production

PRODUCTION OF OIL AND NATURAL GAS BY REGION

IVQ — 2018			IQ — 2019	2018
1,872	Production
of oil and natural gas (a)(b)	(kboe/d)	1,832	1,867
134	Italy		131	144
193	Rest of Europe		169	218
358	North Africa		372	442
327	Egypt		334	259
377	Sub-Saharan Africa		362	348
162	Kazakhstan		148	139
198	Rest of Asia		180	151
99	Americas		107	142
24	Australia and Oceania		29	24
157	Production
sold (a)	(mmboe)	152	157

PRODUCTION OF LIQUIDS BY REGION

IVQ — 2018			IQ — 2019	2018
897	Production
of liquids (a)(b)	(kbbl/d)	887	885
57	Italy		56	64
111	Rest of Europe		102	132
160	North Africa		164	151
67	Egypt		71	77
244	Sub-Saharan Africa		252	251
110	Kazakhstan		96	88
95	Rest of Asia		84	52
51	Americas		60	68
2	Australia and Oceania		2	2

PRODUCTION OF NATURAL GAS BY REGION

IVQ — 2018			IQ — 2019	2018
5,321	Production
of natural gas (a)(b)	(mmcf/d)	5,157	5,358
419	Italy		410	436
449	Rest of Europe		366	469
1,080	North Africa		1,137	1,595
1,420	Egypt		1,434	989
725	Sub-Saharan Africa		599	528
287	Kazakhstan		286	277
562	Rest of Asia		522	543
259	Americas		256	401
120	Australia and Oceania		147	120

(a) Includes Eni’s share of production of equity-accounted entities.

(b) Includes volumes of hydrocarbons consumed in operation (118 and 100 kboe/d in the first quarter of 2019 and 2018, respectively, and 151 kboe/d in the fourth quarter of 2018).

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Gas & Power

Natural gas sales

| IVQ — 2018 | (bcm) | IQ — 2019 | 2018 | %
Ch. |
| --- | --- | --- | --- | --- |
| 8.85 | ITALY | 10.77 | 11.19 | (4) |
| 1.95 | - Wholesalers | 2.55 | 2.68 | (5) |
| 2.11 | - Italian exchange
for gas and spot markets | 2.52 | 2.97 | (15) |
| 1.30 | - Industries | 1.32 | 1.21 | 9 |
| 0.21 | - Small and medium-sized
enterprises and services | 0.35 | 0.31 | 13 |
| 0.38 | - Power generation | 0.40 | 0.32 | 25 |
| 1.30 | - Residential | 2.01 | 2.11 | (5) |
| 1.60 | - Own consumption | 1.62 | 1.59 | 2 |
| 9.87 | INTERNATIONAL
SALES | 10.56 | 11.25 | (6) |
| 7.90 | Rest
of Europe | 8.00 | 9.28 | (14) |
| 1.04 | - Importers in
Italy | 1.02 | 0.89 | 15 |
| 6.86 | - European markets | 6.98 | 8.39 | (17) |
| 1.41 | Iberian Peninsula | 1.21 | 1.27 | (5) |
| 0.46 | Germany/Austria | 0.45 | 0.87 | (48) |
| 1.01 | Benelux | 0.91 | 1.28 | (29) |
| 0.50 | UK | 0.49 | 0.78 | (37) |
| 1.70 | Turkey | 1.77 | 2.00 | (12) |
| 1.58 | France | 1.71 | 1.96 | (13) |
| 0.20 | Other | 0.44 | 0.23 | 91 |
| 1.97 | Rest
of World | 2.56 | 1.97 | 30 |
| 18.72 | WORLDWIDE
GAS SALES | 21.33 | 22.44 | (5) |
| 2.40 | of
which: LNG sales | 2.70 | 2.70 | |

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