Eni Profit Gains 37 Percent on Oil Prices, Output

By Adam L. Freeman

Oct. 31 (Bloomberg) -- Eni SpA, Italy's largest oil company, said third-quarter profit rose 37 percent as crude prices climbed to records and acquisitions boosted production.

Net income advanced to 2.94 billion euros ($3.74 billion) from 2.15 billion euros a year earlier, Rome-based Eni said today in a statement distributed by the Italian stock exchange. Profit excluding changes in the value of inventories rose 53 percent to 2.89 billion euros, beating the 2.42 billion-euro median estimate of eight analysts surveyed by Bloomberg.

``Some great results, especially in the upstream,'' said Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh who rates Eni ``buy.'' ``Sounds like a good investment to me.''

Eni spent about $14 billion last year buying gas and oil fields in the Gulf of Mexico, Congo and Turkmenistan. Chief Executive Officer Paolo Scaroni is snapping up assets to raise output by 4.5 percent a year, on average, through 2011.

Production rose 6.3 percent in the quarter to 1.76 million barrels a day. Eni said it expects this year's daily average to gain 3 percent from last year, when the company pumped on average 1.74 million barrels a day.

Oil Week

Eni is the third of Europe's four largest oil companies to report quarterly earnings this week. Royal Dutch Shell Plc, the region's biggest producer, said profit rose 22 percent to $8.45 billion while BP Plc posted earnings of $8.05 billion.

Crude oil on the New York Mercantile Exchange rose to a record $147.27 a barrel in July and was on average 58 percent higher in the third quarter than a year earlier. Prices have since tumbled 56 percent on concern a global recession will curb demand.

Scaroni was due in Kazakhstan today to sign a planned agreement giving the Central Asian republic a greater share of the Kashagan field, the largest oil discovery in 35 years.

Eni will keep its role as sole Kashagan operator until the fourth quarter of 2012, when the group expects oil to start flowing. As part of an agreement earlier this year, Eni, Total SA, Royal Dutch Shell Plc and Exxon Mobil Corp. will share the operator role with KazMunaiGaz National Co.

Gazprom

Kashagan output will reach an estimated 370,000 barrels a day about a year after production starts and peak at about 1.5 million barrels a day.

Together with Enel SpA, Eni signed an agreement with OAO Gazprom yesterday to develop Russian gas fields.

Enel, Italy's largest power, and Eni won an auction in April 2007 to develop Russian fields held by OAO Gazprom Neft, Arctic Gas and Urengoil. Gazprom, the world's biggest natural- gas company, said yesterday it will also take a stake in SeverEnergia, the partnership formed by Eni and Enel to bid for the Russian assets.

To contact the reporter on this story: Adam L. Freeman in Rome at afreeman5@bloomberg.net