* Aims to sell 5 bln euros of assets in next two years
* Part of goal to sell assets of 7 bln euros by 2019
* Mozambique could benefit from partner with strong skillset
* Expects payment delays in Venezuela
* Q1 operating profits beat expectations
(Recasts lead, adds Venezuela, CFO comments)
By Stephen Jewkes
MILAN, April 29 Italy's Eni is well on
track to sell assets worth 5 billion euros in the next two years
as the oil major looks for resources to fund high-profile
projects in Egypt and Mozambique and offset the impact of lower
The state-controlled company, which has one of the best
success rates in the industry in finding new reserves at one of
the lowest cost bases, has tabled disposals of 7 billion euros
($8.01 bln) to 2019.
"That will be front-loaded with 5 billion euros in the first
two years," Eni CFO Massimo Mondazzi told analysts on Friday.
With CEO Claudio Descalzi at the helm, Eni has been
downsizing businesses like refining and chemicals to focus on
the bread-and-butter job of finding oil and gas.
Some analysts are worried the strategy could leave it more
vulnerable to a downturn.
BP, Statoil and Total beat
analysts' expectations for quarterly results this week,
reflecting in part resilient refining and petrochemical
Eni, the biggest foreign oil producer in Africa, has said it
is ready to sell down stakes in fields it operates, such as the
massive Area 4 gas field in Mozambique and the giant Zohr field
in Egypt, to bankroll development.
The group could benefit from a partner in Mozambique that
has the right skillset to help it develop the project, Mondazzi
said on a conference call on first-quarter results.
"This contract is so big I guess we could take advantage
from a strong additional partner, not only stronger from a
financial point of view but also (with) a capability to run such
a complicated project," he said.
Eni has been in talks to sell down its 50 percent stake in
Area 4, which holds 85 trillion cubic feet of gas that will feed
a series of onshore LNG export plants, mainly supplying Asia.
Reuters reported in March that ExxonMobil was in
talks to buy a stake of varying potential sizes in Eni's Area 4
development, including a full operating stake.
"Talks on disposals are under way and some are very well
advanced," Mondazzi said.
Eni's strategy of selling down oil and gas acreage, its
large reserves and ongoing restructuring all helped support a
"Buy" rating, Santander oil analyst Jason Kenney said.
"These should differentiate it from peers no matter where
oil prices settle in coming months/years," he said.
Mondazzi expressed concern, though, about developments in
Venezuela where state oil company PDVSA, the exclusive operator
of the country's oilfields, owes energy companies billions of
dollars in unpaid bills due to cash-flow problems.
"The situation in the country is critical. So far we've been
paid but we envisage some delays in payment," he said, adding
the amounts would not be huge.
The group was testing certain financial securitization tools
to help secure payments, he said.
A slew of major U.S. corporations have taken sizeable
writedowns on their Venezuela operations due primarily to a
steadily weakening currency.
Eni produces 60,000 boed in Venezuela, mainly from its giant
gas field Perla.
In the first quarter Eni beat operating profit expectations
despite swinging to a net loss because of weak oil prices and a
charge on its Saipem holding.
Adjusted operating profit fell 95 percent to 73 million
euros but was above an analyst consensus of 22 million euros.
"This is a good set of results, especially in the light of
the unfavourable conditions in the E&P (exploration and
production) sector," broker ICBPI said in a note.
($1 = 0.8738 euros)
($1 = 0.8734 euros)
(Reporting by Stephen Jewkes; Editing by David Goodman and