Eni presented the new Strategic Plan 2022-25 with important news. First, the security of supplies and a immediate response to the uncertainty caused by the Russia-Ukraine war: the availability of additional gas on the European and Italian markets is increased by 14 Tcf (trillion cubic feet). More gas but also, in the medium to long term, acceleration of decarbonisation objectives. For shareholders, strengthening of the capital remuneration policy through a dividend increase and share buybacks. Eni proposes a "satellite approach" to ensure profitability and the emergence of value from its businesses. And heralds the birth of one new company for sustainable mobility in view of a potential future listing on the Plenitude model. Just for Fullness (formerly Eni Gas e Luce) the intention to arrive at the IPO by the end of the year is confirmed if conditions permit. These are the main innovations presented by the CEO Claudio Descalzi and from Chief Financial Officer Francesco Gattei during the Capital Markets Day 2022.
Eni Strategic Plan 2022-25: production and financial objectives
Upstream production: Eni expects an average growth of 3% per year, 1,7 million barrels/day in 2022 (1,66 in the first quarter of 2022) towards a plateau of around 1,9 million barrels/day in 2025. The situation of great uncertainty and volatility on energy prices forces plans to be updated and Claudio Descalzi explained that the focus is on gas: production will grow progressively up to 60% in 2030 and over 90% after 2040; on the other hand, the oil component will decrease in the medium and long term. Upstream capex forecasts around 4,9 billion in 2022; €4,5 billion on average over the course of the plan (excluding entities accounted for using the equity method). The overall capex is expected to be 7 billion/year but in 2022 it will be 7,7 billion and 25% of the expenditure will go to green activities and Plenitude.
Exploration and captures CO2. Eni expects 2,2 billion barrels of new resources over the course of the plan, with a unit cost of less than $1,5/boe. For CO2 capture and storage, however, the goal is 10 million tonnes a year.
With portfolio management - between optimizations, selective acquisitions and non-core rationalizations - Eni expects a benefit of 3 billion in the period.
Il free cash flow is seen by Eni as up sharply compared to last year's data: it goes to 25 billion in the four years of the plan in a scenario that estimates oil at 80 dollars/barrel (down to 70 dollars in 2025) and a break-even point at 45 dollars/barrel. Eni's new estimates are based on a scenario in which oil generates $15 to $20 more per barrel than last year's estimates. From here, explained Descalzi, the strengthening of the remuneration for the shareholders.
Eni Strategic Plan 2022-25: growing dividend and buyback
The growth in shareholder remuneration is financed by the Free cash flow which is expected to be 2022 billion in 14. The dividend rises and becomes quarterly, as for the US majors. This year it goes from 86 to 88 cents per share overall based on a Brent price between 80 and 90 dollars/barrel with payment in four installments in September and November 2022, March and May 2023.
Furthermore, a buyback plan of 1,1 billion will be proposed to the May shareholders' meeting with the possibility of further increasing purchases, in 2022, for a value equal to 30% of the incremental free cash flow - to be assessed at the moment - if it is exceeded the threshold of 90 dollars/barrel for Brent. According to the group's estimates, it would be about 350 million dollars in July, in the hypothesis of Brent at 100 dollars.
Eni Strategic Plan 2022-23: more gas and decarbonisation
“The war in Ukraine is forcing us to see the world differently than we knew it. This is a humanitarian tragedy that has generated new threats to energy security and which we must address without abandoning our ambitions for a just energy transition. We are able to make more than 14 trillion cubic feet available on the market”. These are the words with which Claudio Descalzi explained that Eni does not give up the gas that Italy and Europe need but without backtracking on its decarbonisation commitments.
The gas will come from Africa, but also from Norway, from LNG contracts (15 million tons/year at the end of the plan) if and if Gazprom reduces supplies. Eni confirms the disengagement from Russia and from the share in the Blue Stream, the gas pipeline that brings Russian gas to Turkey, but without specifying timing.
On the other hand, acceleration of the reduction of emissions is foreseen scopes 1-2-3 towards the net zero emissions target: Eni raises the drop in emissions from -25% to -35% in 2030 and from -60 to -80% in 2040 compared to 2018 levels. Furthermore, to finance the growth of green activities - including biorefining, hydrogen and nuclear fusion – the share of dedicated investments rises to at least 30% in 2025.
Eni Strategic Plan 2022-25: the new company for mobility
Plenitude for electricity and gas customers will develop 15 GW of green capacity by 2030. Proforma Ebitda forecasts a doubling at the end of the plan to 1,4 billion. But now there is also a new company for sustainable mobility, similar to what Enel has already announced it wants to do. Eni is bringing together the biorefining and vertical integration activities with the agricultural activities necessary for the production of biofuels. The listing is expected but it is still too early, the management clarified, to set dates.
