(Adds comments by management, analyst)
By Stephen Jewkes
MILAN, April 29 (Reuters) - Italian oil company Eni expects to produce more oil and gas this year as new projectscome onstream, it said on Wednesday, after higher output helpedit soften the blow of lower crude prices in its first-quarterresults.
The benchmark Brent crude oil price averaged $55 a barrel inthe quarter, down by almost half from a year ago.
Adjusted net profit in the three months fell 46 percent to648 million euros ($722 million) but the result easily toppedwhat the company said was the analysts' consensus forecast of460 million euros.
Besides the higher production volumes, the impact of loweroil prices were also partly offset by investment income,improved long-term gas supply contracts and better refiningmargins,
BP and Total also reported better thanexpected results on Tuesday due to steep increases in profitsfrom refining cheaper oil.
State-controlled Eni, the biggest foreign oil producer inAfrica, is also looking to reshape its business and focusincreasingly on exploration and production rather than thedownstream refining and marketing operations.
The company is seeking to sell 8 billion euros worth ofassets by 2019 to help boost its cash flow, including reducingstakes in prize exploration acreage like Mozambique and theCongo.
"There are discussions under way on exploration assets andwe are confident one of them could be sold this year," ChiefFinancial Officer Massimo Mondazzi said.
In step with other rivals Exxon Mobil Corp., RoyalDutch Shell and BP, Eni has also committed tocutting its costs and will reduce investments by 17 percent by 2018 to help boost cash.
NEW PRODUCTION
In the first three months of the year Eni's productionincreased by 7.2 percent to 1.7 million barrels of oilequivalent (boe) per day and the outlook is for output to behigher this year than in 2014.
"There were higher volumes in Africa where, with fallingcrude prices, the company was able to recoup bigger volumes fromits production-sharing agreements," a London-based analyst said.
Output this year will be boosted by new field start-ups anda ramp-up of production in new projects in Angola, Congo, Egypt,Venezuela and the United States. The company also expects highervolumes in conflict-torn Libya.
"We are still producing an average of around 300,000 barrelsper day in Libya," said chief upstream officer Antonio Vella ina conference call.
Eni, which used to produce around 280,000 boe per day of oiland gas in Libya before the downfall of Muammar Gaddafi, hasbeen able to keep its plants running since much of the gas itproduces is used for domestic power generation.
Eni's shares closed down 1.5 percent while the Stoxx Europe600 oil and gas sector index was down 1.8 percent. ($1 = 0.8973 euros) (Reporting by Stephen Jewkes; editing by Jason Neely and GregMahlich)
BP (BP.)
