MILAN—Italian oil and gas group Eni raised its production targets for the year on July 30, boosting its shares after second-quarter net profit slumped due to lower oil prices and a heavy loss at subsidiary Saipem.

Oil and gas production is targeted to rise more than 7% this year, up from a previous 5% target, helped by output in Venezuela, Norway, the United States, Angola and Republic of Congo, and expectations of higher volumes in Libya.

The Italian major posted a 10.7% rise in output in the second quarter.

“Upstream growth is there and it’s steadily going all right. Saipem aside, the group is well positioned,” said Jason Kenney, oil and gas analyst at Santander.

Oil company profits are taking a battering from falling crude prices and weak demand. Anglo-Dutch major Shell on July 30 said it would axe 6,500 jobs and step up spending cuts, responding to extended low prices which contributed to a 37% drop in second-quarter profit.

Eni said adjusted net profit in the second quarter fell 84% to 139 million euros (US $153 million).

Stripping out the Saipem effect, adjusted net profit was 448 million euros ($489 million), below a 480 million euro ($524 million) Reuters consensus. On July 28, Saipem reported a quarterly adjusted operating loss of 738 million euros ($806 million) after heavy writedowns as part of a turnaround plan.

Eni continues to pursue selling down its 43% stake in Saipem as part of plans to shift more than $5 billion of the oil contractor’s debt off its books.

“Our target is to deconsolidate the debt and we’re working on that,” Descalzi said.

The CEO singled out steady cashflow generation as the company’s key achievement despite crude oil prices halving over the past year. It generated $5.68 billion in the first half, in line with a year ago.

Eni, which earlier this year became the first large oil company to cut its dividend after the slump in oil prices, said it would pay an interim dividend of 0.4 euros per share.

Iran Gazing

Eni, the biggest foreign producer in Africa, is focusing increasingly on the bread and butter business of finding oil and gas under Descalzi’s stewardship despite plans to cut group investments by 14% for the year.

With Iran looking set to return to global oil markets following a nuclear deal struck this month, the CEO played down the chance of making any imminent investments given belt-tightening across the oil industry.

“At the moment the industry is cutting 30% of investments, but in 2-3 years this cut will impact the imbalance between demand and supply ... in the future we will need Iranian production,” Descalzi said.

Iran needs investments over $100 billion if it is to resume strong production rates quickly, he said. Eni has a deal with Iran to recoup its previous investments in the country in barrels of oil.

At 1302 GMT Eni shares were up 2%, while the European oil and gas sector was up 2.53%.