Eni presented the new and ambitious Strategic Plan 2023-2026: more gas, less oil and a sharp reduction in emissions. In detail, the new industrial strategy for the coming years focuses on: energy security and accessibility through the geographical and technological diversification of energy sources and the continuation of the decarbonisation plan. For shareholders, strengthening of the capital remuneration policy through an increase in the dividend and share buyback. These are the main innovations presented by the CEO Claudio Descalzi and from the Cfo Francesco Gattei during Capital Markets Day 2023, on the day of the publication of the 2022 results.
However, the record quarterly and the new strategic plan did not support the title of the Italian oil giant who wins the black jersey a Business Square. (-5,03% to 13,4 euros per share). Bringing back the title at the levels of the end of 2023. "Policy on dividends must be digested", explained the CEO now towards the end of his third term. “Eni is strong. He can make this plan even without me. I can be useful yes, but no one is indispensable”. This is how Descalzi replies to a question on the renewal of the company's top management after the latest statements by Carroccio ("We also need a change of bass for large state-owned companies such as Eni and Enel"). “Everyone likes to drive the car they built, but if someone else drives it, the car goes just the same,” concluded the top manager.
Descalzi (Eni): "Free from Russian gas by 2025"
“We have already diversified our business, as we weren't so strong three years ago, while today we can speak of a more resilient distribution to shareholders, thanks to dividends and buybacks – explained the CEO -. Today we no longer stand on just one leg, but we have an ecosystem of companies that includes gas, refineries, mobility, Plenitude and others". Descalzi then recalled the series of agreements and activities concluded during the year for replace definitively the Russian gas by 2025. “We can count on solid relationships with producing countries and on an accelerated development model, which will allow us to increase gas flows from Algeria (now Italy's top supplier), Egypt, Mozambique, Congo and Qatar. But it is not only important to bring gas for the complete replacement of Russian gas but also "to have the regasifiers".
The storage situation is good, better than what could have been expected according to Descalzi. “Because we started from a better level than storage and this has brought us now to 64%. If this climate continues we will have, at the end of winter, double the stock level of last year, perhaps above 50%. But it's all likelihood, because if the cold comes. Next year we will send around 7-8 billion, partly through the Piombino regasification terminal, and then there will be a second and perhaps even a third", continued the CEO of Eni during the presentation of the 2023-2026 Plan .
Eni Strategic Plan 2023-2026: production and financial objectives
La production, which was below expectations in 2022, is expected to grow at an average annual rate of 3-4% over the four years of the Plan and then stabilize until 2030. The end of relations with Russia guides a large part of the Group's strategy, whose focus is on gas: production will grow progressively up to 60% by 2030. Just as the liquefied natural gas, Eni expects contracted LNG to grow to over 18 million tonnes per year by 2026, double that of 2022. And the rest on decarbonisation: Scope 1, 2 and 3 emission reduction targets confirmed compared to 2018: -35% by 2030; -80% by 2040; and net zero by 2050.
Growth plans also in the biorefining sector
The target for Eni Sustainable Mobility is to reach a capacity of over 3 million tonnes per year by 2025 and over 5 by 2030. A network of over 5.000 points of sale in Europe to market and distribute new energy vectors, such as electricity and, in perspective, hydrogen. Eni expects to add around 300 new stations over the plan period. While Versalis will continue its transformation path into a fully specialized and sustainable chemical company, with a higher specialization of its portfolio, and will allow to generate income over the period of the plan.
CO2 exploration and capture
From exploration, Eni expects 2,2 billion barrels of new resources in the four-year plan, of which 60% gas, with a unit cost of less than $1,5 billion/boe. Upstream capex is projected to be around 6-6,5 billion on average per year over the course of the plan. The 2023 capex is expected to be around 9,5 billion, while total investments over the period of the plan are indicated at 37 billion euros. In dollars, and with the same inflation, this translates into a +15% (compared to the 2022-2025 Plan), for new opportunities and the expansion and acceleration of Upstream projects.
Operating cash flow is seen to rise sharply
The Six-Legged Dog will generate a Cash Flow From Operations (CFFO) before working capital of more than €17 billion in 2023 and more than €69 billion over the course of the Plan, an increase of 25% in 2026 compared to 2023, at the constant 2023 scenario. From here, he explained the top manager, the huge investments and the enhancement of the shareholder remuneration, keeping the leverage between 10-20%. For this year, Ebitd is expected at 13 billion, the second best result in 10 years.
Eni Strategic Plan 2023-2026: dividend growth and buyback of 2,2 billion
Eni intends to distribute between 25% and 30% of the annual operating cash flow through a combination of dividends e buyback. The 2023 dividend is increased by 7% to 0,94 per share and will continue to be paid in four equal quarterly installments, in September 2023, November 2023, March 2024 and May 2024. In addition, at the May meeting, the company will propose a treasury share buyback program for a value of 2.2 billion, equal to approximately 4,5% of outstanding shares at the current price.
The application of the new remuneration policy to the scenario implies a return for shareholders in the period of the Plan equal to 40% of the current market capitalization and in 2023 a total return for shareholders of 11% at the current price.
Eni's plan on Plenitude: tripling profitability by 2026
Fullness achieved excellent results in 2022. The company brings together the retail and renewable activities of the Eni group and in 2022 achieved the operational and financial objectives of 2022 with an Ebit of 0,34 billion and a renewable capacity of 2,2 GW (millions of kilowatts), double last year. And for the future? The oil giant expects Plenitude's renewable capacity to grow to more than 7 GW by 2026 and more than 15 GW by 2030. The company's goal is to more than double the number of charging points by 2026 and for EBITDA to increase by three times in 2026 than in 2022.
As for theIpo, Descalzi said that "there is no plan A and plan B", in response to a question from analysts. The quotation “is still a possibility that depends on the markets”, or, “we can look for partners, or have both. We need to understand the market trend in the first 4-5 months of the year”, pointed out the CEO.
Eni financial statements 2022: record profits, profitability doubled
Eni too, like the other big oil companies, has framed a 2022 records thanks to the prices of raw materials. The net profit of the Six-legged dog - 30% controlled by the Treasury - reached 13,3 billion euros, a good 9 billion more than in 2021. In the fourth quarter of the year alone, profits reached 2,5 billion, registering an increase of almost 50% compared to the same period in 2021. While theoperating profit net of extraordinary items (adjusted Ebit) it doubled compared to 2021, to 20,4 billion, driven by the Exploration & Production sector, the Global Gas & LNG Portfolio sector and, lastly, by Refining & Marketing.
In 2022, Eni's net cash flow from operating activities was 17,46 billion, an increase of 36% compared to 2021, while financial debt amounted to 7 billion euros, 2 less than the previous year. However, the group's hydrocarbon production fell slightly by 4% to 1,6 million barrels per day as a result of "unscheduled outages and force majeure," the company said.
In addition, the oil major has resolved to distribute to shareholders the third of the four tranches of the 2023 dividend (relating to the 2022 financial year). There coupon will be 0,22 euro (in relation to a total annual dividend of 0 euro), with detachment on Monday 88 March 20, and will be payment il 22 March 2023.
