Eni S.p.A. reported its first quarter 2025 earnings, surpassing analyst expectations with an EPS of €0.4517 compared to the forecasted €0.4172. The company’s revenue was slightly below expectations at €22.57 billion against a forecast of €22.58 billion. Following the announcement, Eni’s stock price increased by 1.88% in pre-market trading. According to InvestingPro data, the company maintains a GOOD financial health score of 2.57, reflecting strong operational performance. The company highlighted a strong net income growth and reaffirmed its strategic initiatives for 2025.
Key Takeaways
- Eni’s Q1 2025 EPS surpassed expectations, leading to a positive market reaction.
- Net income increased by approximately 60% quarter-on-quarter.
- Eni continues to expand its renewable energy projects, including a new SAF facility in Sicily.
- The company maintains a robust cash flow position with plans for further leverage reduction.
- Eni confirmed its dividend and share buyback program for the year.
Company Performance
Eni demonstrated a solid performance in Q1 2025, with a net income of €1.4 billion, marking a significant increase of about 60% from the previous quarter. The company’s cash flow before working capital adjustments stood at €3.4 billion, showcasing its strong financial health. With an EBITDA of $15.7 billion and a healthy current ratio of 1.15, Eni continues to strengthen its balance sheet with a leverage of 18%, which is expected to improve to 12% by year-end. InvestingPro analysis reveals that Eni is currently undervalued, suggesting potential upside for investors. The company’s strategic diversification into renewables and transition technologies is positioning it well within the energy sector.
Financial Highlights
- Revenue: €22.57 billion, slightly below the forecast of €22.58 billion.
- Earnings per share: €0.4517, above the forecast of €0.4172.
- Net income: €1.4 billion, up 60% quarter-on-quarter.
- Cash flow before working capital: €3.4 billion.
Earnings vs. Forecast
Eni’s EPS of €0.4517 exceeded the forecasted €0.4172, resulting in a positive earnings surprise of approximately 8.3%. Although revenue came in marginally below expectations, the strong earnings performance reflects the company’s operational efficiency and strategic initiatives. This marks a continuation of Eni’s trend of outperforming EPS expectations in recent quarters.
Market Reaction
Following the earnings release, Eni’s stock rose by 1.88% in pre-market trading, reflecting investor confidence in the company’s financial performance and strategic direction. The stock’s increase brings it closer to its 52-week high of €15.452, indicating strong market sentiment. With a beta of 0.92, Eni has demonstrated relatively low price volatility compared to the market. InvestingPro subscribers can access 8 additional exclusive ProTips about Eni’s market position and future potential, including detailed analysis of its strong five-year return performance. Eni’s performance contrasts with broader market trends, where energy stocks have experienced volatility.
Outlook & Guidance
Eni reaffirmed its full-year cash flow from operations guidance of €11 billion and announced plans for five major start-ups in 2025, including projects in Norway and Angola. The company is targeting an upstream production of 1.7 million barrels per day by the end of the year. Eni also confirmed a €1.05 dividend and a €1.5 billion share buyback program, underscoring its commitment to returning value to shareholders. InvestingPro data shows that Eni has maintained dividend payments for 30 consecutive years, with a current attractive dividend yield of 7.87%, making it a significant dividend player in the sector.
Executive Commentary
Francesco Gatti, CFO of Eni, stated, "We are creating value, leveraging our competitive strength in the Upstream," highlighting the company’s focus on enhancing its core operations. He further emphasized, "Our strategy is designed to create a stronger, more profitable and more resilient company," reflecting Eni’s commitment to sustainable growth.
Risks and Challenges
- Biofuel market oversupply could pressure margins.
- Delays in U.S. Low Carbon Fuel Standard implementation may impact strategic initiatives.
- Contract renegotiations in the gas business could introduce volatility.
- Macroeconomic pressures and geopolitical tensions may affect global energy demand.
- Supply chain disruptions could impact project timelines.
Q&A
During the earnings call, analysts inquired about Eni’s asset sales to Vitol and exploration results in Namibia. The company expressed confidence in these transactions and highlighted positive outcomes from its exploration activities. Additionally, Eni addressed ongoing contract renegotiations in its gas business, aiming to manage volatility with a strong balance sheet.
Full transcript - ENI S.p.A. (ENI) Q1 2025:
Conference Operator: Good afternoon, ladies and gentlemen, and welcome to Eni’s twenty twenty five First Quarter Results Conference Call hosted by Mr. Francesco Gatti, Chief Transition and Financial Officer. For the duration of the call, you will be in listen only mode. I am now handing you over to your host to begin today’s conference. Thank you.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: Thank you. Good afternoon. Our February capital market update emphasized the speed and scale at which we have been progressing our strategy. Quarter one maintained the pace and recent events have confirmed why our clarity of strategic view and speed of action is so critical. We are creating value, leveraging our competitive strength in the Upstream, strengthening and diversifying the company, fixing and then performing activities, materially strengthening our balance sheet, all while offering a competitive and resilient return to investors.
Reviewing the important strategic highlights of the quarter and year to date. Growth is an important feature in our plan. In the Upstream, in March, John Kasper began production and will add 66,000 barrel per day of oil production at plateau four Var as it targets over 400,000 barrel per day by the fourth quarter. Kasberg is the first of the five major start up due this year with Valderix in Norway, Agogo and NGC in Angola plus Congo LNG Phase two to follow setting us up for a strong 2026. In the transition business, Plenitude has completed the construction of its 200 megawatt battery in Texas and acquired two forty five megawatt in its share of photovoltaic and storage in California.
While Enilite began production of SAF at its new 400,000 ton per year facility at Gela in Sicily. We are also realizing significant value through the investment of Aligner Capital into our transition businesses and the valorization of our industry leading exploration activity via the dual model. We have closed the agreed increase in AP stake in Plenitude to 10% with an additional cash of $2.00 €9,000,000 at the March. We also closed the increase in KKR stake in Enel I to 30% with an additional cash in of $6.00 €1,000,000 in April. This followed the €2,970,000,000 we collected at the March.
Furthermore, we have received non binding offer for additional stakes in Plenitude that could take line investment to 25%, thirty %. We consider around 70% a majority in stake in both our major transition business as broadly the right level for the time being. In the Upstream, also in March, we announced a major dual exploration valorization with agreement to sell stakes in Balin in Cote D’Ivoire and Congo LNG in The Republic Of Congo to Vitol for a cash in of around $2,700,000,000 expected to complete later this year. Our satellite model is an important feature of our business and in the Upstream in February, we announced an MoU with Petronas to combine assets with a mixed component of growth and value in Indonesia and Malaysia. This is really a significant development for ENI creating a new and highly material regional satellite in an important part of the world with a strong partner and with the added opportunity of some cash valorization alongside.
We expect it to move to a definitive agreement around the middle of this year with the completion before the end of twenty twenty five. Structural response in some of our legacy activities are also required as the energy evolves. The transformation of Versailles over the next four, five years is a major positive source of self help amounting to more than €1,000,000,000 per year EBIT improvement by 02/1930. We have positive news to report here as well with agreement reached with the institution and the unions on the details of our plan. We closed Brindisi the first of the remaining two steam crackers at the March and Priolo will be shut down before the end of this year.
Our strategy is designed to create a stronger, more profitable and more resilient company. Our first quarter results demonstrate this. Net income €1,400,000,000 is up around 60% quarter on quarter in a very similar scenario setting. Upstream production was in line with our expectation as 2024 divestment impacts work through seasonal factors play out and we weigh the positive impact of the start ups that will contribute to our full year expectation of around 1,700,000 barrel per day average. At the segment level, E and P pro form a EBIT of €3,300,000,000 almost offsetting lower crude and production year on year helped by lower expenses and efficiency gains as a benefit of portfolio upgrading.
GDP results reflect the normal seasonal strength and were essentially in line with last year. Enilive and Planet reported pro form a results consistent with our full year expectations once respective seasonalities take into account. Enilive was impacted by the deterioration in the biofuel margins year on year and also lower biorefinery utilization albeit biorefinery EBITDA remained positive. This was partially offset by positive evolution of our marketing operation. Planning to record a 3% EBITDA improvement year over year supported by strong retail results and rising renewable generation.
In our transformation activity, both refining and chemical were loss making. Refining results reflect with a weaker margin year on year and lower throughputs over the closure of Livorno plus the extended turnaround of San Lazaro in the quarter. Our continued losses in chemical reflect the challenging scenario in Europe that we consider to be a structural feature and confirm our action to restructure and transform this business. Cash flow before working capital of €3,400,000,000 in the quarter were consistent with our full year guidance of €13,000,000,000 a $75 barrel. The cash tax rate was around 30% in line with normal levels and dividend received were in line with associated net income.
CapEx in the quarter was €1,900,000,000 a little below the run rate of €9,000,000,000 in the February guidance. Valorization and divestment proceed net of acquisition in the quarter totaled €3,000,000,000 and included cash in for our transition satellites. We repurchased €386,000,000 shares in this quarter completing our €2,000,000,000 20 20 4 program. We expect to begin the $20.25 euros 1,500,000,000.0 buyback program after the shareholder approval in May. Balance sheet leverage was 18%, four % lower than the full year the last quarter despite a weaker dollar adding one percentage point while our pro form a leverage incorporating agreed transactions still to close stood at 12%, an improvement of three percentage point from end twenty twenty four and the minimum in our history.
Volatility and simplicity is a recurring feature of this industry. Every two, three years we are impacted by an external event. So it is really normal course of business. Our company needs to be prepared and it should be to leverage the cyclical upswing. Given the current scenario, it is worth reviewing our balance sheet in a little more detail.
In the past five quarters, we have announced over €9,000,000,000 in tail asset divestment, dual exploration valorization and align external investment into our transition oriented business. We have executed faster and for greater value than we and certainly the market expected moving quickly to lower our leverage. An additional element of protection is provided by our satellites. The model not only enable us to raise capital and self financing our growth, while highlighting the valuation multiples related to transition business or specific upstream geography such as Norway, but it also strengthens our resilience during downturn phases. On one hand, we are able to contain our leverage through targeted business valorization.
On the other, the availability of autonomous entities capable of containing price downturns with their own balance sheets allows us to secure more stable cash flow via dividends and hence we are less affected by market volatility. Our consolidated balance sheet is just about the strongest in our history. At the end of the quarter, we had over €28,000,000,000 financial asset and down draw committed lines and we have lengthened maturities by more than two years over the past two years. We estimated our net cost of net debt in 2025 will be below 1.5%. This position will enable us to continue to balance pursuing our strategy remaining resilient and flexible and deliver our returns to shareholders.
When we discussed our plan and four year strategy, we emphasized the value in the consistency in our approach. We have also confirmed our dividend at €1.05 and the share buyback totaling €1,500,000,000 itself a minimum floor that we are committed to maintaining even under adverse market scenarios. And we need to be nimble and responsive to the changing condition. The work we have done on the balance sheet surpassed significantly, but there are also further measures we’ll now begin to take to reinforce our financial position without compromising our medium long term objective of our investment proposition. We have identified over €2,000,000,000 of initial actions to enhance our free cash flow positions and lowering our cash neutrality by around $15 per barrel, including additional portfolio upside, selective CapEx rescheduling over the coming months, active working capital management aimed at enhancing cash recovery and structural cost optimization initiative.
Together these actions further enhance our financial position and derisk shareholder distribution. In summary, the additional financial trends we have introduced into E and I over the past year, the intrinsic resilience of the model we have built and the additional option and levers we are available mean we can maintain underlying strategy and also confirm the full distribution policy we have announced. With the current scenario headwinds, we are focused on delivering our underlying performance and leveraging our portfolio optionality to accept cash flow impacts and deliver our distribution commitments. We therefore can confirm our full year production outlook of 1,700,000 barrel per day. We also confirm our profitability guidance for GDP in Life and Plenitude.
At our lower scenario assumption, we expect to generate €11,000,000,000 of cash flow from operation, a little better underlying than our sensitivities imply. We expect to offset this impact with the cash mitigation measure I described including net CapEx to below €6,000,000,000 Therefore, we can also confirm leverage between €0.15 0 point 2 euros in 2025 within the €0.1 and 0.2 plan range. We are very satisfied with our progress in 2025 year to date both on the strategic and financial sides. The macro scenario has deteriorated and is volatile and uncertain, but the action we are taking and flexibility we have mean we are in a position to resist its full impact. We can therefore advance our strategy and deliver on our shareholder commitments.
With that, I conclude my remarks and welcome any questions you may have.
John, Conference Host, Eni S.p.A.: Thank you, Francesco. We will now open to questions. Francesco is joined by any top management, and we will attempt to get around to answer all the questions you may have. As a courtesy to everybody who participates, can we keep it to two questions? And then hopefully, can get through everybody in the time allocated.
We’re going to start with the first question. It comes from Alejandro Vigil at Santander. Alejandro?
Alejandro Vigil, Analyst, Santander: Thank you, John, and thank you, Francesco for taking my questions and congratulations for the beat in this first quarter. The two questions I have is one about the guidance production, the 1,700,000 barrels per day. Your thoughts about the discussions about Kazakhstan OPEC plus quotas and if you think there is some risk coming from this situation. And the second question is about Any Life and the outlook for margins. Thank you for these spreads that you have added to the release.
I think it’s very useful. But I’m very interested in the outlook for the margin evolution in the coming quarters in Thank you.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: I leave the floor to Guido Brusco for the first answer and Stefano Ballista for the one related to 2019.
Guido Brusco, Management Representative, Eni S.p.A.: Well, as far as concerned the production outlook, as you know, we have as anticipated also by Francesco, we have five significant start up, two in Angola, Two in Norway and one in Congo. So our production will grow over time to hit the guidance we gave. For Kazakhstan, so far, neither the operator of the asset nor the shareholder and the contracting company have been engaged by the authority for any production cuts?
Stefano Ballista, Management Representative, Eni S.p.A.: Yes. Thank you for the question. Talking about biofuel view, well first of all this is a year of oversupply. This is something well known. Rough number is about €2,000,000 oversupply demand versus supply.
In the first quarter, we saw demand expected growth demand and then we will deep dive a little bit not coming yet. And reason is that actually players have the whole year to satisfy some obligation. And second reason actually there are some uncertainties in U. S. That we expect to be clearly defined moving forward.
On demand, it’s worth to highlight that the sustainable aviation fuel 2% target for EU pretty much in this first half didn’t come through. It is expected for the second half and reason pretty much are to fall, the chance to get to satisfy the demand in the whole year. And second, logistic facility to be in place. About U. S, it’s relevant to highlight that low carbon fuel standard target of an increased GAG reduction to 30% at the beginning of the year expected April 1 has been delayed given to technical, let me say, request from the Office of Administrative Law of California.
And now it is expected well, until some weeks ago, it was September. Now it’s expected July given Carbo already gave a review of these technical aspects. So overall, we see a path of margin increasing thanks to this rebalancing pathway we are viewing. I have to say clearly, it’s very relevant that we focus on value not on volume. This is a clear strategic approach on an oversupply market.
This is what we are doing. We are definitely focused on value even reducing in some case volume. The more the system will move in that direction the better is going to be the improvement trajectory we are seeing and foreseeing.
John, Conference Host, Eni S.p.A.: Thank you. Thanks Alejandro. The next question is from Biraj Bhakataria at RBC. Biraj.
Biraj Bhakataria, Analyst, RBC: Hi, thanks for taking my questions. Francesca, you touched on, obviously, the strength of the balance sheet and the progress you’ve made there, which is obviously now looking in good shape. I was wondering, we’ve obviously seen the environment deteriorate a little bit more. You’ve touched on some of the smaller changes you’ve made to your kind of capital program. But I guess the question is, what will you need see price wise or signal wise to adjust your activities more materially there?
And then just a follow-up for Stefano on Sustained Aviation. In late March, there was a joint statement from your customers, the airlines, arguing about concerns on availability and then the cost of SAF suggesting these mandates were not realistic or achievable. So I just wanted your thoughts on whether it’s is it reasonable or realistic to assume that these mandates could be relaxed this year? Or do you expect policymakers to hold firm there? Thank you.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: Yes. About the CapEx and the reaction to the price signals. Clearly, we think that at the end of the day, once there is a deterioration of the scenario, you have the old opportunity substantially to use different levers that you, let’s say, prioritize in term of effectiveness, in term also on impacts in future trends of the company and the target that the company has given. For this reason, we have you have seen that we have announced this €2,000,000,000 of improvement in cash that is for around one half or around one half is related to CapEx and cost improvement, So shifting certain investment postponing or extending the execution of certain activity efficiency. There is also a natural trend related to a lower market scenario that will implying a lower cost in executing the activity.
And the remaining part is related split half and half between a portfolio improvement and the working capital effectiveness or a new action in term of valorization of working capital or stocks and managing this activity. This give us more flexibility for a worsening scenario in case it will be necessary. I would say that there is no special or strict rules what is the price that will imply a change in our CapEx profile. Clearly, if there is a further deterioration of the scenario, we will continue to apply even more low lever, including the one that you were referring CapEx, but also other activity that we can expedite and will contribute to cash even in a lower scenario. So I don’t have a specific answer.
What I can say there is flexibility in our plan even to adjust to lower prices. Then I leave to Stefano.
Stefano Ballista, Management Representative, Eni S.p.A.: Yes. Thank you, Francesco. And thanks for the question actually. Well, answer is no. We actually don’t think there is any chance to let’s say not having in place this target.
This is a mandatory target 2% within the end of the year. And actually if you don’t fulfill it there are going to be carryover of the target next year and a penalty as well. Let me add just a couple of comments on the topic as a whole. Actually, SAF capacity, it’s in place in Europe. And not only Europe actually, we have also some capacity in U.
S. And in China as well. In Europe, just to make an example, we got Jela with up to 400,000 ton per year and we just start up production beginning of this year. So the current mandate of 2% that equal about 1,000,000, one point two as capacity to be definitely fulfilled. So this is the first comment.
Second comment, the target is on fuel supplier actually not on airlines. And even the matter of logistic actually it’s not there because for a transition period you can fulfill the mandate in a single airport. You don’t need to be physically blending a biojet in each airport. This give a lot of let’s say flexibility in having it done. And then let me say as last comment, probably in term of target, I would have a little bit different perspective.
Now we got 2% in place up to 2,030 and then 6%. So it’s three times just from one year to another. In order to have, let’s say, a proper development of the investments, actually would be a proper approach to get to sort of step up along the way. In that way, you can, let’s say, have a balanced approach between supply and demand. So there is I mean space to work together with airlines to couple with the energy transition and the GHG reduction targets in an effective and efficient way.
Biraj Bhakataria, Analyst, RBC: Okay. Thank you very much.
John, Conference Host, Eni S.p.A.: Thanks, Biraj. The next questions come from Josh Stone at UBS. Josh, are you on the line?
Josh Stone, Analyst, UBS: Hi, John and good afternoon. I have two questions, please. One, wanted to come back and talk about asset sales. Maybe just talk about how confident you are in closing your sale to Vitol and maybe just characterize the market for selling assets. You talked about some nonbinding office of Plenitude.
Are there still live discussions happening there? And how are you thinking about that? Is it better to sell now or maybe even wait for higher values? Maybe if you could just talk about Plenitude and what you’re thinking on that. And then the second question on Namibia.
There was some news last week that you hit hydrocarbons at your latest well. I think that’s about two from two. So maybe you can just talk about the next steps and what you can share so far, what you’ve learned about from your campaign there? Thank you.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: Thank you. The first very fast. Clearly, asset sales, we are extremely confident, first of all, because we have already cashed in an additional 600,000,000 in early April and April 11. That is the amount that is related to the top up of the 5% on the Any Life KKR deal. And then we are working on this planning to potential transaction 15%, twenty %.
The nonbinding offer are there. There is, I would say, a strong competition pressure. I don’t see any, let’s say, loss of valuation under the current market also because this is clearly a deal that has a long term perspective and also eventually will be helped by a reduction or expectation of lower interest rate in the future. On the deal on Africa, West Africa with Withal, we are all the documents ready, signed and we are just waiting for the various approval that are required in this activity. There is no mark provision that will impede to proceed.
So I would say that almost 90%, ninety five % of our plan is already in our end or with very positive perception of its execution. In terms of Namibia, I leave now to Guido to provide all the updates.
Guido Brusco, Management Representative, Eni S.p.A.: Your question was quite timely. As we just released a few minutes ago a press release where we confirmed the discovery in Namibia. The well successfully penetrated the target and the reservoir is showing good petrophysical properties, no water oil, no water contact. We made an intensive acquisition campaign, wireline logins, hydrocarbon samples, sidewall cores. And in addition to that, we made also a well test, and we achieved a flow rate in excess of 11,000 barrel of oil per day, which was surface constrained.
The oil is a light oil and with limited associated gas and very low high net gas. So very positive, very interesting. More assessment and more analysis, of course, will have to be made. So the well will be temporarily plugged and abandoned and the rig will be released and then we assess the full size. We’ll assess with the operator and the other partner the full size of the discovery.
John, Conference Host, Eni S.p.A.: Thanks, Guido. Thanks, Josh. Good timing on that question. So we’re now going to move on to one second, Giacomo, Giacomo Romero at Jefferies. Giacomo, are you there?
Giacomo Romero, Analyst, Jefferies: Yes. Thank you. And can I just thank you as well for incremental disclosures in this quarter’s reports? Are very much welcome. Two questions for me.
First one on the buyback. Today, you reconfirmed the €1,500,000,000 buyback at the lower macro scenario. This effectively stretches your CFFO payout at the upper end of your new range of a new policy. What happens if the macro deteriorates further? Are you comfortable going above that 40% payout, Francesco?
And second question is on the agreement, the MOU you signed with the YPF on LNG in Argentina. Can you talk a bit on the attractiveness of Argentina And will you consider integrating these upstream and looking for assets there? Or are you happy just we were just happy with the share in the project?
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: Yes. Thank you. I will reply to the first question, then I leave back to Guido for the Argentinian questions. About the buyback, you know that once we set our distribution policy and the amount starting level for the buyback, we set that in a way that will be a floor. And therefore, we are going to execute.
This clearly, we give the reference in term of percentage of cash flow distribution, but we have all delivered to keep this distribution policy and buyback affordable in our balance sheet because there is a lot of other tools that are not just the percentage of cash flow from operation, but also the capability as we are seeing in this maneuver to balance this distribution also with free cash flow improvement in term of portfolio or in term of working capital. And clearly, the leverage level is another factor that have to be considered whilst you have to manage the flotation of the price. So I think there is no issue at all on confirming this €1,500,000,000 even in a lower scenario. Clearly, eventually, you could accelerate or slow down a bit the pace of buyback, but this is part of the normal activity that we are able to execute within the almost one year of the buyback plan. I leave now to Guido for the YPF deal.
Guido Brusco, Management Representative, Eni S.p.A.: Yes. The Vaca Muerta Basin, as you know, is the second world largest shale gas field. And the Argentina LNG project is an integrated project from the upstream up to the midstream and the export of the LNG. This is as the objective to hit more than 30,000,000 tonnes per annum by the early two thousand and thirty. It has different phases, three phases, which will be run-in parallel.
ENI and YPF has signed an MoU to execute one of these three phases, which would reach a total of 12,000,000 tonnes per annum. We are joining YPF, who has a very strong and deep country knowledge on the unconventional upstream of Vaca Muerta. They are operating this asset from decades, So they know pretty well the subsurface and the all development and operation activities. While on our side, Zi and I, we are recognized as a fast track and low cost project operator. And we would bring our experience and leadership, particularly on floating LNG projects.
We are looking at this Argentina LNG project and full value chain to complement our portfolio of LNG and also to reach our strategic target of 20,000,000 tonnes per annum. And we think that the combination of the expertise of YPF on the upstream of Vaca Muerta and the expertise of ENI on the midstream floating LNG will set this venture for success.
John, Conference Host, Eni S.p.A.: Thanks, Guido. Thanks, Giacomo. We’re going to move now to Matt Smith of Bank of America. Matt, are you there?
Matt Smith, Analyst, Bank of America: Hi, there. Good afternoon. Thanks for taking my questions. The first, I wanted to come back to the sort of CapEx cuts that you sort of laid out today. And you’ve sort of listed optimization and postponements of projects as one of the sources, the reduction in CapEx.
I just wanted to understand sort of which projects we are specifically referring to. And I guess my broader question was if the current commodity price scenario was to extend into next year, would any of these projects not be postponed, but be canceled? So that’d be the first question. And then the second one, I wanted to come back to Namibia, if I could, noting the information that you put out on the latest well today. I mean, given you have had additional time in the lab with the first discovery, I just wondered if you could compare or contrast the correct read that the second discovery has better characteristics than the first?
Or what additional color could you give us there, please? Thank you.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: On the CapEx, on the capital optimization, there is no major project that we can point out specifically. It’s a broader activity, some exploration activities, some production optimization activity related to the EV charging activity related eventually to the rebranding of our stations service station. So it is a spread around activity with marginal impact on a specific project. So you shouldn’t expect any delay on the key and most important projects. About Namibia, if we don’t
Guido Brusco, Management Representative, Eni S.p.A.: want to answer. About Namibia is too premature to make as I said that mean, I spoke about it just a few minutes ago, we need to assess the full size of the discovery. It’s really premature. We just finished the well testing. We are still in a phase where we have to do some work.
And I would also recommend to refer to the operator to get more insights and information on the discovery itself.
John, Conference Host, Eni S.p.A.: Thank you. Thanks, Matt. We’re going to move now to Alessandro Pozzi. Alessandro? Alessandro, are you there?
Okay. We’re going to move on now. Alessandro, if you want to come back on, you can. We can move now to Michele de la Vignette at Goldman Sachs. Michele?
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.0: Thank you, John, and congratulations on the strong results. Two questions, if I may. First, I wanted to understand with the new Cypress gas development, when you expected production to come through? And if you thought that could effectively revive exports from Damietta and effectively make Egypt once again an exporting country of LNG? And then secondly, on the Indonesia, Malaysia combination, I see you continue to progress the negotiations there.
I was wondering if you expect any kind of cash contribution for that deal or if it’s likely to be a pure effectively combination of assets? Thank you.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: On the Indonesia Malaysia, clearly, can tell you what is the experience that we have in this kind of combination. Once you set up the new entity, the new company, you clearly design also not only the business plan with the investment and the different or a relative ratio between the parties, but it also a financial plan that is a result of the addition of this kind of asset and therefore the capability for the new entity to leverage on this asset for more financial capability. And therefore there is generally a contribution that is related to the possibility to have certain dividend upfront that will help to generate cash more cash than in a stand alone situation. And then on Cyprus, if we don’t
Guido Brusco, Management Representative, Eni S.p.A.: On Cyprus, we are working for an FID within the year with the partner and the two host government. It will be a subsea tieback to the Egyptian facilities. So we expect an execution time between two and two point five a year from the FID. So if we will be able to make an FID by the end of this year, production may come sometime between Q4 twenty twenty seven, Q1 ’20 ’20 ’8. Of course, to have Egypt again as a net exporter, a few more things has to happen.
There is a growing confidence on the ability of Egypt to kick out more investment. They are continuing to pay their outstanding receivables. So there is more activity in general, not just from E and I, but also from other operator. And there is also, again, a restart of the journey on the increase of the capacity of renewables, which will free up more gas for export. So the combination of these two things together with the new development and the Cyprus gas may set Egypt again in a couple of years as a net exporter again.
But this is not just linked to the Cyprus gas.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.0: Thank you.
John, Conference Host, Eni S.p.A.: Thanks, Michele. We found Alessandro. So Alessandro, if you’re on, you can ask your questions. Thanks.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.1: Thank you. Thank you for taking the questions. I have two. I think the first one is on the cost saving initiatives of €2,000,000,000 over €2,000,000,000 part is CapEx. I think there is other large initiatives regarding working capital
I was wondering if you can give us maybe more colors on those as well. And with regards to Argentina, I was wondering what is the level of Argentina, investments that you’re planning to make over the next few years and whether potentially you’re looking to invest in upstream, I guess so, and the type of maybe production levels that you expect from the country when Phase one will be online? Thank you.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: About the cash initiative, I mentioned before, almost more than €1,000,000,000 is related to the CapEx and cost improvement. CapEx, as we said, are mainly related to postponement of certain activity that could be a standard without major impacts on big projects, but just related to certain activity that could be, let’s say, executed in a longer time. In term of cost, there will be a natural reduction in term of cost also related to the lower scenario. And we do expect that there is also benefit from the portfolio activity of the remaining €1,000,000,000 that we said. There is almost half, so around the €500,000,000 is related to the portfolio improvement in term of less cash out and better value on the potential cash in.
And on the other side, the remaining part is related to the cash initiatives that are management of working capital. This is a maximum I can describe you. If you want to describe Argentina, Guido?
Guido Brusco, Management Representative, Eni S.p.A.: Yes. I mean Argentina is an integrated project. So basically, we will be all along the value chain from the upstream to midstream balanced ideally, so having the same equity in both sides. The project, of course, is in a very early stage, but the Phase three, the phase that we are assessing with YPF of 12,000,000 tons per annum will have cost in the region of $20,000,000,000 of course, from I I’m including old cost from upstream to the transportation to the midstream and liquefaction.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.1: And is that included in your full year CapEx guidance or is it on top?
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: We are speaking about of MoU that is still to be clearly designed, defined and with a lot of activity that have to be fine tuned later on. So it’s not yet included.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.2: Thank you.
John, Conference Host, Eni S.p.A.: Thanks, Alessandro. We’re now going to move to Peter Low at Redburn. Peter?
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.2: Hi, yes, thanks. The first question was just on the tax rate in the quarter, a bit lower than we expected. Can you perhaps just outline what was driving that? And then maybe what we should expect for the rest of the year? Will it kind of return to that 50% to 55% range?
And then the second question was just on production in the quarter, particularly gas. There’s quite a large sequential step down. I think you called out disposals in the release, but I thought those were more a bit more oil weighted. So I just wanted to check, was there anything like maintenance or turnarounds kind of impacting that gas number in the quarter? Thanks.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: Yeah. About the tax rate, clearly, tax rate in this quarter was positively impacted by the structure of the results. It’s a quarter where you have the benefit of contribution from GDP, from planet to the for the power. And this is lowering for generally to say higher price both of oil and gas. So from the geographies of even of upstream that has a lower tax rate.
So this quarter is a quarter that of a tax rate that you could generally expect once there is this mix of contributors. The trend for the year in a scenario that we lowered in term of mainly of oil prices we’ll see this tax rate increasing towards the upper end of the expectation. 55% could be a rough estimate where you could see the results coming. So clearly, the quarter is will contribute, but we do expect an increase in the coming months because the price of oil that we are designing or are planning is lower and the contribution of the lower tax rate businesses will be less impactful. And then I leave for the gas.
Guido Brusco, Management Representative, Eni S.p.A.: For the gas and for production in general, if we compare with the I mean sequentially quarter four with quarter one, the decrease is essentially driven by lower entitlement in some country where we have gas production, some PSA effect in Libya, Indonesia and Algeria and some M and A impact in U. S.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.2: Thank
John, Conference Host, Eni S.p.A.: you. you, Peter. I’m now going to move to Irene Hipmona at Bernstein. Irene?
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.3: Yes. Thank you. Good afternoon. First, a quick question on cash flow. From your announced recent disposals, how much would you expect to close and book in the second quarter, please?
And then secondly, on E and P. Your underlying per barrel EBIT margin has improved sequentially quite a lot given it was a similar oil price environment. You have indicated that around half of your planned disposals in the full year plan is from upstream. So my question is, can we anticipate that as you continue high grading the portfolio, that unit margin improvement can continue further? And of course, it is structural.
So presumably also your oil price sensitivity may change over time? Thank you.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: On the disposal side, on this quarter, second quarter, we have already cashed in €600,000,000 that are related to the KKR deal. We are potentially expecting the closing of the West African deal, but that could slip also to the third quarter, taking into account of the different authorities that have to be involved and therefore, it’s something that we could expect during the summer, let’s say. And we do expect clearly that we are able to proceed to the next step for the Plenetub deal. So this will not clearly a cash in date, but will be in this quarter potentially a conclusion of the tender activity that we are executing.
Guido Brusco, Management Representative, Eni S.p.A.: Yeah. I mean the improvement of the EBIT per barrel and cash flow per barrel as we anticipated also in our Centimeters capital market update is structural as we are high grading our portfolio, developing, I mean, value barrel and disposing lower value barrel. So it’s a structural phenomenon, which over time should continue, of course.
John, Conference Host, Eni S.p.A.: Thanks Irene for your questions.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.2: Thank you.
John, Conference Host, Eni S.p.A.: Thanks. We’re going to move to Henry Tarr at Berenberg. Henry? Henry, are you there?
Conference Operator: Mr. Tarr, your line is open.
John, Conference Host, Eni S.p.A.: Okay. Well, Henry, if you can reconnect and we can come around to your question. But we’ll move now to Paul Redman at BNP. Paul?
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.4: Hi, John and team.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.5: Thank you
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.4: very much for your time. Two quick questions from me. First flow is on the cash flow mitigation chart. We’ve got a bunch of buckets here. I just wanted to work out if any of these are structural reductions or whether these are one off impacts that we could see a reverse impact in 2026?
And secondly, just to look at the refining business, it’s a second sequential loss for that business. Just trying to work out your outlook for the year for that business. Do we expect any change in margins, any changes in utilization rates as we go through 2025? Thank you very much.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: On the cash initiative, these are clearly structural because except for the few delays that we mentioned that are spread around between executing certain activity, the branding or finalize station or EV charge, so certain special activity. All the rest are related to factoring. Working capital management, that means substantially something that is not absorbed during the year, and the cost reduction that, as we said also, is related to the improvement and also the scenario that we are facing that clearly has a lower cost of energy overall. So I think these are clearly structural changes and structural improvement, including the portfolio variation that we mentioned in term of higher valorization or higher stake. The refinery, I think that Pino or yes, please.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.2: Yes. Thanks, Francesco. About the refining losses in the first quarter, this is due to the drop of the CERM, the margin. And the fact that we had during the quarter the start of the maintenance in Taranto refinery and then offset in FCC of San Lazaro. What we expect is to increase the refinery utilization in the starting from the second quarter.
And while we expect that the margin will remain slightly better than today, but not so bullish last like last year.
John, Conference Host, Eni S.p.A.: Pino. Henry, I think we’ve got you back. Henry?
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.6: Thanks for taking the question. So two questions. Just to come back to AnyLive.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.5: Is the
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.6: contribution from the margins from the Straight Bio side Or are you essentially making all of the money on the marketing side rather than the actual manufacturing of the fuel is the first question. And then the second is just on the cash flow. So lease interest payments, is Q1 a good run rate for the rest of the year at sort of €370,000,000 ish? Thank you.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: I leave to Stefano for the first question and then I come back to the second one.
Stefano Ballista, Management Representative, Eni S.p.A.: Yeah. Thank you for the question. Yeah, the contribution margin it’s positive. It’s slightly positive clearly related to the scenario. As I mentioned before, we definitely focus on value and not on volume.
So we prefer to avoid production that is not going to be accretive in term of value. I have to add actually that the integrated approach that characterize any live give us the chance to let’s say optimize margin thanks to our captive market. And this is going to give an extra contribution compared let me say to the pure market value.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: On the lease impact over the let’s say, year, I would expect an increase during the year, clearly, also because there are some certain startup of initiative and projects that will attract additional lease. So this quarter is, let’s say, a proxy, but it’s still a bit light towards what is the running rate during the next quarters.
Biraj Bhakataria, Analyst, RBC: Okay. Thanks, Francesca.
John, Conference Host, Eni S.p.A.: Thanks, Henry. We’re going to move to Matt Lofting at JPMorgan. Matt?
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.7: Thanks all for taking the questions. Firstly, I just wanted to come back to the capital allocation changes that Annie made this morning and particularly to gross CapEx. It looks like you sort of effectively put through the lower part of a 5% to 10% reduction in full year gross CapEx versus what you outlined in Feb. If you aggregate everything up, can you just sort of share a sense of how much of that is activity related versus sort of finding underlying efficiency measures? And then secondly, following up on the comments earlier on refining.
If you take refining and Vesalis combined, I mean, clearly still a challenging Q1. Is there any signs more recently of any improvement in margins to the degree that you’re seeing some degree of lower feedstock costs, particularly perhaps through any higher cost assets, which perhaps have most or more to benefit? Thanks.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: On the CapEx reduction, as I mentioned, it mainly is the postponement of activity. There is also a component that we mentioned about improving the reduction of on amount. If you wanted to have a split in the range of €500 6 hundred million we are referring, you could say that 200,000,000 to $250,000,000 is related to the postponement of the activity and the rest is structural variation related also. You have to consider that we have contingency in our plan. Part of the activity that we present has already an implicit impact of possibility to manage flotation.
So it is not a magic solution that we have, but sometimes it’s just a matter to execute and to implement the contingency that we have inside. Then I leave to Adriano and to Pino for the answer about
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.8: the the chemical side in term of demand, we expect a slightly improvement in line with the seasonality because normally the second quarter is better than Q1. But to be honest, the scenario is still on the trough of the cycle in term of demand. For sure, we expect an improvement in term of cost of utilities because virgin NAFTA is expected to reduce. Right now in the second quarter, we expect also a lower TTF in term of gas and we know that we are very we consume quite a lot of energy for the chemical sector. So we expect an improvement in thermal margin for the rest of the year on the chemical side.
And I leave Pino for the refinery.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.2: Yes. The refining side, we expect a slightly improvement in the margin in the mid part of the year, mainly due to the driving season, but not so far. In complexity, the refining margin, we expect that remain not so bullish because of the market that is quite stable.
John, Conference Host, Eni S.p.A.: Thanks, Pino. We’re going to now move and thank you everybody for respecting the two questions. We’re getting through this nice and quickly. So we’re going to move to Massimo Bonasoli at Equitas. Massimo?
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.0: Good afternoon. Thank you. And two clarification question for me. The first on the €2,000,000,000 mitigating initiatives. Could you give us a broader time frame for the savings to be realized and the eventual one off costs associated with the savings?
The second question on the outlook for GGP. You mentioned the upside of over €1,000,000,000 Could you shed some light on the market condition needed to improve the guidance and to renegotiate the contract versus current conditions? Thank you.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: Alar, first of all, the €2,000,000,000 is a free cash flow impact. It means that it is executed within the year and completed within the year. So there are actions that are, let’s say, captured immediately. So the postponement of activity in line with the execution of that activity, the possibility to have certain savings that we mentioned about the lower scenario, the portfolio improvement, etcetera, is something that are already generating the result. Clearly, it requires also the time for executing the project.
You have to consider that the economic benefit is higher than the cash flow benefit because clearly the economic cut will be or the improvement is something that has a higher value, but that clearly is captured within the twelve months that are ending within December. On the, yes, scenario in the gas Yeah.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.9: So talking about the upside case for GDP, you pointed out two elements, are actually the ones that we also are pursuing. One is the renegotiation and negotiation of our supply and sales contracts. This is as you know a feature a normal feature of the business. We have a few, discussion ongoing. And I would say that probably the summer will be the period in which we might see some of those completing.
And so I mean depending on the outcome of those discussions this could have some value unlock. In terms of market condition, we are fairly let’s say, defended from the downside risk of flat price. We have some upside linked to clearly flat price increase instead. And the other elements that actually we like in terms of producing more value is spreads and volatility.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: So
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.9: geographical spreads, oil hub spreads, summer winter spreads those are part of the volatility that if those happens we will be able to capture.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.4: Thank you.
John, Conference Host, Eni S.p.A.: Thanks, Massimo. Thanks, Christian. We go we’re the last two, so we’re going to move first to Kim Fustier at HSBC. Kim?
John, Conference Host, Eni S.p.A.0: Hi, good afternoon and thanks for taking my questions. I had two, please. First on Venezuela, could you comment on any impact on your operations and your ability to lift crude cargoes and the revocation of export licenses and secondary tariffs on the country? And then lastly, just a quick housekeeping question. You’ve cashed at about €3,000,000,000 in the first quarter from the sale of Enulife to KKR, but we can’t actually see the disposal proceeds in the cash flow statement.
So if you could point to where we’re supposed to look at that would be helpful. Thank you.
Guido Brusco, Management Representative, Eni S.p.A.: On Venezuela, Guido. Yes. No, Venezuela, as you know, we have essentially gas production. We produce gas for domestic market and to feed the gas fired power plant for civil consumption. And we have been paid in the past by in kind essentially.
So now we are engaging The U. S. Authorities to find ways to be paid, but at the same time be compliant with the new regime imposed by U. S. And we are confident that by the year end, we’ll find a way to honor our commitment towards the population and honor also the compliance with The U.
S. Sanctions.
John, Conference Host, Eni S.p.A.: Kim, I’ll come back to you on the cash flow statement and the structure. The cash is in there, but it’s not straightforward. So I can do that for you. But we’ll do that offline if that’s okay.
John, Conference Host, Eni S.p.A.0: Thanks.
John, Conference Host, Eni S.p.A.: We can move now to the last question, which is Lydia Rainforth at Barclays. Lydia?
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.5: Thank you, John, and good afternoon. Two final questions, if I could. The first one, these are both big picture, given where the balance sheet is and it’s much stronger than it was even a year ago, but in previous downturns, it does give you a more privileged position into how you respond to volatility than in the past. So I’m just actually asking you to reflect on that. Does having that strength of balance sheet impact how you think about how you respond?
And is there opportunities that it opens up? And then secondly, I hear everything you say about the cash management, the mitigation measures that you’re putting in place. And hopefully, when you start the buyback, it actually helps the relative share price performance even further. But given where the share price is, do you ever start thinking about we can lean into the balance sheet a bit more and buy back even more shares just given where the share price actually is? Thanks.
Francesco Gatti, Chief Transition and Financial Officer, Eni S.p.A.: In terms of clearly on the leverage and the privilege to have probably to be the unique company inside the peer group that probably will be will reduce its leverage the current quarters or in coming quarters, thanks to the execution of our strategy that is already anticipating potential downturn and has a structural robustness in its structure. I think that will give us the opportunity to manage the volatility. Volatility is in the current market is that one day you have a drop by 5%, then there is a rebound of 2%, three %. There is another tweet and a lot of things are counter tweet. It’s very difficult to understand what where are the fundamentals and where are the psychology of the market.
So this strong balance sheet will give us the opportunity to select the best levers in order not to impact to harm to match our strategy execution, to have different opportunities, clearly, execute whatever we like and also to keep some additional levers out for the bad times, if these bad times will come out. So this is clearly something that for us is a unique time we had and is a great chance to be effective, but clearly also to be vigilant on what is going on and not, let’s say, to rely on a positive expectation, a positive scenario. In term of buyback, you know that we are approving the buyback under the with policy that we have presented during the next AGM. Then we started to buy and we will see also the time when the condition will have and we will execute, but I cannot anticipate what is the pace of execution because clearly this is part of the rule of the game. There is a clear advantage or interest in buying back at a lower price.
That is a normal logic. I think that we have ended. I don’t know if John, do you have something else to conclude?
John, Conference Host, Eni S.p.A.: We have Francesco. That’s all the questions done. Thank you everybody for attending the call. Thank you for your questions. Thank you for the speed and directness we got through that.
I think they worked very well. So wishing you a happy end of the week. Good luck for next week, and speak to you soon. Thanks a lot. Bye.
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