The company is assuming that the long-term price for Brent would stand at a long-term price $60 a barrel from 2023 onwards, down from a previous forecast of $70. For the years 2020-2022, Brent prices are expected respectively at $40, 48, and 55 per barrel, compared to the previous assumptions of $45, 55, and 70 per barrel.
Eni added that it was still working on its assessment of the impairments and that the estimate might vary by around 20%, up or down. Of the pre-tax impairment charges estimated at $3.16 billion, Eni expects write-downs of about $2.26 billion related to its upstream assets and around $900 million in its refining operations. The estimate also includes devaluation of tax credits of around $790 million.
The amount of the estimated impairment losses are expected to be recorded in Eni’s consolidated results for the Q2 2020 due to be released on 30 July 2020.
Eni added that the market developments linked to the spread of the COVID-19 pandemic made the robustness of the company’s strategic path and its long-term choices even more compelling.
Namely, the distinctive element of this strategy is the fixed 2050 absolute emissions reduction target of 80% covering all of the company’s products.
Claudio Descalzi, Eni’s CEO, said: “We confirm our strategy to become a leader in the decarbonization process, notwithstanding the enduring impacts of the COVID-19 pandemic on the global economy and the company. We are assessing how to speed up our plans. This ongoing evolution will allow the company to achieve a better-balanced portfolio, reducing the exposure to the volatility of hydrocarbon prices, while progressing towards our targets of sustainability and profitability."
Eni is not the 1st major company to announce such an impairment hit. Namely, BP is also expecting massive reductions to asset values during the second quarter of 2020 as a result of the combined hit of the oil price plunge and the COVID-19 pandemic.
