Eni plans deeper cost cuts, asset sales to weather oil plunge

LONDON (Bloomberg) -- Eni SpA, Italy’s largest oil producer, plans additional asset sales valued at $7.9 billion by 2019 and deeper cost cuts, as it seeks to offset the impact of the plunge in oil prices.

The explorer targets production growth of 13% to 2019, while reducing upstream capital expenditure by a further 18% compared with last year’s plan, Rome-based Eni said in a strategy update Friday. Savings from measures including contract renegotiations and synergies with existing assets have brought down break-even costs for new projects to $27/bbl of oil equivalent from $45, it said.

Eni and its peers are trying to adapt to the worst crude-market collapse in a generation by cutting spending. The company reported a fourth-quarter loss last month, even as oil and gas production rose to the highest in five years.

“Our industry is facing a very complex challenge: reducing costs to fulfill short-term constraints while enhancing long-term value,’’ CEO Claudio Descalzi said in the statement. “We are well positioned to meet this challenge through a competitive cost structure, an efficient operating model and a flexible asset portfolio.’’

Eni confirmed its 2016 dividend of $0.90 a share.