Eni Can Still Do Well With Oil at $65-$70, CEO Descalzi Says

Oil platforms off the coast of Congo, image: ENI

By Alessandra Migliaccio

(Bloomberg) — Eni SpA can do well with oil at $65 to $70 a barrel, Chief Executive Officer Claudio Descalzi said.

That range “is still safe if you are in conventional assets,” Descalzi said in an Bloomberg Television interview with Francine Lacqua and Guy Johnson in Davos, Switzerland. He said Rome-based Eni’s asset break-even price is even lower at $45. Oil prices will probably rebound by the end of this year and could reach $70 to $90 “in a couple of years,” he said.

Oil fell almost 50 percent in 2014, the most since the 2008 financial crisis, as the U.S. increased production and the Organization of Petroleum Exporting Countries resisted calls to cut supply. With declining prices, oil companies are reducing capital-expenditure budgets to protect profit margins.

Descalzi said oil companies including Eni will cut investments by 10 percent to 13 percent. It’s hard to invest as long as there is uncertainty and the role OPEC can play in restoring stability is “really crucial,” he said.

Once prices stabilize, there is a “good window of one year” in which mergers and acquisitions may occur in the industry as companies take advantage of opportunities. Eni won’t be among companies participating in acquisitions as it has no need for the moment, Descalzi said.

“Our strategy is to work on exploration,” he said. “We’ve discovered more than 10 billion barrels in the last six years.”

Copyright 2015 Bloomberg.

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