Eni Announces Results for the Second Quarter and the First Half of 2008

San Donato Milanese, July 31, 2008 - Eni, the international oil and gas company, today announces its group results for the second quarter of 2008 (unaudited). The Board has also approved the interim report as of June 30, 2008, which will be published prior to August 2008, together with the independent auditor’s report. The most relevant information from the interim report is provided in this press release.

Paolo Scaroni, Chief Executive Officer, commented:
“I am pleased to announce that Eni has delivered a record performance for the first half of 2008, due to high oil prices and to our success in generating industry leading production growth. The Company has continued to make progress in further strengthening our E&P portfolio, whilst expanding our G&P activities into Europe through the acquisition of Distrigaz. Our confidence in the Group’s excellent outlook underpins my proposal to Eni’s Board on September 11, 2008 to pay an interim dividend of €0.65 per share.‘

(a) For a detailed explanation of adjusted operating profit and net profit see page 26.
(b) Profit attributable to Eni shareholders.
(c) Fully diluted. Dollar amounts are converted on the basis of the average EUR/USD exchange rate quoted by the ECB for the periods presented.
(d) One ADR (American Depositary Receipt) is equal to two Eni ordinary shares.

(1) As converted at the Noon Buying Rate of 1 EUR = 1.569 USD taken fromthe US Federal Reserve Statistical Release on July 25, 2008.

Financial highlights

Second quarter of 2008
– Adjusted operating profit was €5.61 billion, up 33.6% from the second quarter of 2007. This was due to the better operating performance of the Exploration & Production division, driven by higher realizations and production growth. Partly offsetting these was the euro’s appreciation against the dollar (up 15.9%) and rising costs and amortization charges. The Petrochemical and Refining & Marketing divisions reported lower operating profit.
– Adjusted net profit was up 4.4% to €2.32 billion, mainly as a result of the stronger operating performance that was partly offset by a higher tax rate on an adjusted basis (from 48.3% to 57.5%).
– Capital expenditures for the quarter were up 62.3% from a year ago to €3.64 billion mainly related to continuing development activities of oil and gas reserves, exploration projects, and the upgrading of gas transportation infrastructures and Saipem rigs and offshore construction vessels.
– Net cash generated by operating activities amounting to €5.19 billion and coupled with cash from divestments for €145 million was used to fund a part of financing needs associated with expenditures on capital and exploration projects (€3.64 billion), the payment of the balance dividend for the fiscal year 2007 (€2.55 million) and the repurchase of 8 million own shares at a cost of €195 million. Net borrowings in the quarter increased by €974 million to €16.56 billion.

First half of 2008
– Adjusted operating profit for the first half was €11.51 billion, up 21.9% from a year ago, due to a better operating performance reported by the Exploration & Production division, partly offset by lower operating profit reported in the Petrochemical and Refining & Marketing divisions.
– Adjusted net profit was up 9.6% to €5.37 billion, mainly as a result of the stronger operating performance, that was partly offset by a higher tax rate on adjusted basis (from 47.4% to 52.4%).
– Net cash generated by operating activities amounting to €9.95 billion and coupled with cash from divestments for €473 million was used to fund almost all financing needs associated with expenditures on capital and exploration projects (€6.76 billion), dividend payments (€2.55 million), the completion of the acquisition of Burren Energy Plc (€1.7 billion) and the repurchase of 16.6 million own shares at a cost of €388 million. At June 30, 2008 net borrowings amounted to €16.56 billion and increased by €238 million from December 31, 2007. Foreign currency translation effects contributed to the reduction of net borrowings.
– Return on Average Capital Employed (ROACE)⁽²⁾ calculated on an adjusted basis for the twelve-month period ending June 30, 2008 was 19.8% (21.4% for the twelve-month period ending June 30, 2007).
– Ratio of net borrowings to shareholders’ equity including minority interest – leverage⁽²⁾ – was unchanged at 0.38 with respect to end of 2007.

(2) Non-GAAP financial measures disclosed throughout this press release are accompanied by explanatory notes and tables to help investors to gain a full understanding of said measures in line with guidance provided for by CESR Recommendation No. 2005-178b. See pages 36 and 38 for leverage and ROACE, respectively.

Interim dividend for 2008

In light of the financial results achieved for the first half of 2008 and the projected full-year results, the CEO will propose the distribution of an interim dividend for the fiscal year 2008 of €0.65 per share (€0.60 per share in 2007; up 8.3%) to the Board of Directors on September 11, 2008. The interim dividend is payable on September 25, 2008 to shareholders on the register on September 22, 2008.

Operational highlights and trading environment

Second quarter of 2008
– Oil and natural gas production for the second quarter averaged 1.772 mmboe/d, an increase of 2.1% compared with the second quarter of 2007 mainly due to the benefit of the assets acquired in 2007 and 2008 in the Gulf of Mexico, Congo and Turkmenistan (for an overall increase of 88 kboe/d), as well as continuing production ramp-up in Egypt, Angola, Pakistan and Venezuela. These improvements were partially offset by unplanned facility downtime in the United Kingdom and Australia, and mature field declines in Italy. Higher oil prices resulted in lower volume entitlements in Eni’s Production Sharing Agreements (PSAs) and similar contractual schemes, down approximately 100 kboe/d. When excluding the impact of lower entitlements in PSAs, production was up 8.1%.
– Eni’s worldwide natural gas sales were 22.16 bcm, up 7.7% mainly driven by an increase in international sales that were up by 18.7% mainly reflecting organic growth achieved in European markets.
– Oil and gas realizations in the quarter were up 58% driven by strength in Brent prices (up 76.5% from the second quarter of 2007).
– The trading environment favorably influenced natural gas marketing margins due to favorable trends in the euro vs. the dollar exchange rate.
– Refining results were affected by higher planned and unplanned downtime, the euro’s appreciation against the dollar and rising refining utility costs, partly offset by an improved dollar-denominated trading environment. Marketing margins on wholesale markets also weakened.

First half of 2008
– Oil and natural gas production for the first half of 2008 averaged 1.784 mmboe/d, an increase of 2.8% compared with the first half of 2007 mainly due to the benefit of the assets acquired in 2007 and 2008
in the Gulf of Mexico, Congo and Turkmenistan (for an overall increase of 103 kboe/d), as well as continuing production ramp-up in Egypt, Angola, Pakistan and Venezuela. These positives were partially offset by planned and unplanned facility downtime and technical issues in the North Sea, Nigeria and Australia, as well as mature field declines. Higher oil prices resulted in lower volume entitlements in Eni’s PSAs and similar contractual schemes, down approximately 90 kboe/d. When excluding the impact of lower entitlements
in PSAs, production was up 8.1%.
– Eni’s worldwide natural gas sales were 53.07 bcm, up 8.6% driven by an increase in international sales that were up by 20.1% mainly reflecting in addition to the higher seasonal sales recorded in the first quarter, organic growth achieved in European markets.
– Oil and gas realizations in the first half of 2008 were up 52.4% driven by strength in Brent prices (up 72.5% from the first half of 2007).
– The trading environment unfavorably affected natural gas marketing margins.

Portfolio developments

Acquisition of Distrigaz SA
On May 29, 2008, upon finalization of an auction procedure in which virtually all the major European gas operators took part, Eni entered into a binding agreement with the French company Suez-Tractebel to buy its 57.243% majority stake in Distrigaz SA, listed on Euronext, for an initial price of €2.74 billion. The deal values Distrigaz at €4.8 billion. In 2007, Distrigaz, the incumbent gas company within Belgium, sold 17 bcm of gas volumes directed to Belgium businesses, resellers and utilities as well as other European markets. Distrigaz’s long-term gas supply contracts covered approximately 90% of its annual sales; these supply contracts are with Norway, the Netherlands and Qatar. This deal will strengthen Eni’s leadership in the European gas market by securing an incumbent position within the Belgium gas market. The Belgium market will play a crucial role in the development of marketing activities in Europe because it is a liquid gas market and allows easier access for gas connectivity between several European markets. The deal is expected to be finalized by the end of 2008, as soon as authorization from the European Commission is granted and other conditions are met, including the condition that the municipal holding company Publigaz SCRL waives its rights of pre-emption over the transfer of shares from Suez to Eni. Currently Publigaz owns 31.254% of the share capital of Distrigaz. Following the closing of the deal, Eni will launch a mandatory cash offer on remaining Distrigaz shares.
On July 30, 2008 Eni and Publigaz signed a shareholders agreement intended to regulate the governance of Distrigaz. This agreement provides the right of Publigaz to put its shares to Eni in accordance with the terms contained in the shareholders agreement. Publigaz has concurrently waived its pre-emption rights on the 57.243% stake of the share capital of Distrigaz being sold.

Furthermore, Eni signed a preliminary agreement with Suez to dispose of certain assets, also targeting optimization of its asset portfolio. Eni’s consideration assets include: (i) Eni’s network of low-pressure pipelines serving the consumer area of Rome; this is a 5,300-kilometre long network; (ii) interests in some of Eni’s exploration and production properties. Also the two partners are negotiating certain long-term supply contracts whereby Eni will supply to Distrigaz: (i) volumes of electricity up to a maximum of  1.1 GW of generation capacity for 20 years; (ii) volumes of gas to be delivered in Italy and outside Italy up to a 20-year period and an option for Distrigaz to purchase LNG volumes equivalent to 0.9 bcm to be delivered to the Gulf of Mexico for 20 years.

Other portfolio developments

– Defined a cooperation agreement with the Republic of Congo for the extraction of unconventional oil from the Tchikatanga and Tchikatanga-Makola oil sands deposits. The two deposits that cover acreage of approximately 1,790 square kilometres are deemed to contain significant amount of resources based on a recent survey. Eni plans to monetize the heavy oil by applying its EST (Eni Slurry Technology) proprietary technology intended to convert entirely the heavy barrel into high-quality light products. The agreement also comprises construction of a new 450 MW electricity generation plant (Eni’s share 20%) to be fired with the associated natural gas from the operated M’Boundi field and a partnership for the production of bio-diesel.
- Signed a memorandum of understanding with the British company Tullow Oil Ltd to purchase a 52% stake and the operatorship of fields in the Hewett Unit and relevant facilities. Eni aims to upgrade certain depleted fields in the area so as to achieve a gas storage facility with a 5 bcm capacity to support seasonal upswings in gas demand in the UK. Once completed, it will be the largest storage site in the UK. This transaction is expected to close by the end of 2008.
- Signed a strategic agreement with the Venezuelan State oil company PDVSA for the definition of a plan to develop a field located in the Orinoco oil belt, with a gross acreage of 670 square kilometres. This block is deemed to contain significant amounts of heavy oil according to a recent survey. Eni plans to monetize the heavy oil using the EST (Eni Slurry Technology).
- Renewed the partnership with the Brazilian oil company Petrobras to implement joint projects targeting crude oil production and processing, production and marketing of bio-fuels and joint assessment of options to monetize gas reserves that were found by Eni offshore Brazil.
- Finalized a strategic oil deal with the Libyan national oil company based on the framework agreement of October 2007. This deal effective from January 1, 2008, extends the terms of Eni titles in Libya until 2042 and 2047 for oil and gas properties respectively. It also targets a number of industrial initiatives designed to monetize the large reserve base, particularly through the implementation of important gas projects.
- Signed a memorandum of understanding with the state-owned company Qatar Petroleum International to target joint investment opportunities in the exploration and production of oil and gas.
- Made a cash offer to acquire up to 20% of the share capital of Hindustan Oil Exploration Ltd pursuant to the acquisition of Burren Energy Plc, resulting in the indirect acquisition of 27.17% of the share capital of the target company. This company is listed on the main Indian stock markets. Although the formal offer process is not yet completed, the outcome is likely to be positive and Eni believes that it should be able to increase its interest to 47.17%.
- Signed a memorandum of understanding relating to the thermoelectric sector in Egypt whereby the Company will provide its technology for the combined production of electricity and steam from gas-fired plants.
- Signed an agreement to purchase a 17% stake in the share capital of Gaz de Bordeaux Energie Services SAS. Also Eni’s associate Altergaz (Eni’s interest being 38%) intends to purchase a stake of a similar size. The two partners plans to support the development of the target company by supplying it with up to 250 mmcm/y for ten years to expand sales to residential, commercial and industrial customers.
- Signed a gas supply contract with a thermoelectric customer in Russia. This deal marks the start of Eni’s gas marketing activities in the country.
- Started-up the Oooguruk (Eni 30%), Mondo (Eni 20%) and Corocoro (Eni 26%) fields in Alaska, Angola and Venezuela, respectively. Completed the upgrading of facilities at the operated Bhit gas field in Pakistan
(Eni 40%) leading to the start-up of the satellite Badhra field.
- Sanctioned the development plan of the operated Nikaitchuq oilfield in Alaska (Eni 100%). Production start-up is expected by the end of 2009.
- Approved the Kitan oilfield development area by the Timor Sea Designated Authority pursuant to the declaration of commercial discovery that was made by Eni. The discovery is located in lease 06-105 in the Joint Petroleum Development Area 170 kilometres off the Timor Leste coast and 500 kilometres off the Australian coast.
- Granted the West Timor exploration lease that covers an area of 4,075 square kilometres onshore and offshore Indonesia.
- Successfully bid for 32 exploration leases offshore the Gulf of Mexico close to certain of Eni’s producing fields as well as 18 exploration leases in Alaska.
- Continued exploration success:
(i) in the UK, a gas and condensates discovery was made near the recent Jasmine discovery (Eni 33%). Joint development of these two structures is being assessed in combination with existing facilities. The oil and gas Kinnoul discovery (Eni 16.67%) is planned to be developed in synergy with the production facilities of Andrew (Eni 16.21%);
(ii) in Norway, the operated Afrodite and participated Gamma gas discoveries were made (Eni 45% and 17% respectively) and the operated Marulk discovery (Eni 20%) was successfully appraised;
(iii) in Egypt offshore the Nile delta, the important Satis gas discovery (Eni 50%) will support supplies to the planned capacity expansion at the Damietta liquefaction facility;
(iv) in the Gulf of Mexico, a number of oil discoveries were made with the Kodiak well (Eni 25%), that will be developed through the facilities of the operated Devil’s Tower platform, and the operated Appaloosa/Aransas and the participated Stones-3 wells (Eni 100% and 15% respectively);
(v) offshore Angola, the oil discovery Sangos 1 in the operated Block 15/06 (Eni 35%) was declared of commercial interest;
(vi) offshore Sicily (Italy), the operated gas discovery Cassiopea 1 (Eni 60%) was made yielding excellent results.

Outlook for 2008
The outlook for Eni in 2008 remains positive, with key business trends for the year as follows:
- production of liquids and natural gas is forecasted to increase by approximately 2% from 2007 (actual oil and gas production averaged 1,736 mmboe/d in 2007) under the management’s scenario of Brent crude oil price at $112 per barrel for the full year.  Additional production flowing from assets acquired in 2007 and 2008 in the Gulf of Mexico, Congo and Turkmenistan, as well as field start-ups in Angola, Egypt, Venezuela, Congo, Pakistan and the USA will sustain production performance against expected mature field declines and lower volume entitlements in the Company production sharing agreements (PSA). The Company expects to continue to grow robustly in the medium-term in a high-price environment; particularly the Company estimates an average production growth rate of 3% till 2011 assuming Brent price at $120 per barrel over the period. The Company has also revised its long-term oil price assumption to $65 per barrel (real terms 2012);
- sales volumes of natural gas worldwide are forecasted to increase by approximately 3% from 2007 (actual sales volumes in 2007 were 98.96 bcm) reflecting the stronger seasonal sales recorded in the first quarter.
Eni expects to achieve an increase in international sales driven by growth in a number of target markets in the Rest of Europe and in the LNG business. This sales forecast does not include any contribution from the acquisition of Distrigaz, whilst it takes account of the full contribution coming from upstream gas operations that were acquired in the Gulf of Mexico in midst 2007;
- refining throughputs on Eni’s account are expected to be unchanged from 2007 (actual throughputs in 2007 were 37.15 mmtonnes). Higher throughputs are forecasted at the Ceska Refinerska as a result of the acquisition of an additional stake made in 2007. This improvement will be offset by an expected decrease in Italy mainly at the Livorno refinery as a result of an unfavorable refining scenario and facility downtime at the Venice refinery. The Sannazzaro refinery is expected to achieve higher processing;
- retail sales of refined products are expected to increase by approximately 2% from the 2007 level
(11.8 mmtonnes were the comparable volumes achieved in 2007, which excludes volumes marketed in the Iberian Peninsula in 2007). This increase is driven by higher sales in Europe due to the full contribution of assets acquired in 2007 in Central-Eastern Europe and higher market share projected in retail marketing operations in Italy.

In 2008, management expects to spend approximately €14 billion on capital expenditures up 32% from 2007 (€10.59 billion in 2007). Major increases are expected in the development of oil and natural gas reserves, the upgrading of construction vessels and rigs, and the upgrading of natural gas transport infrastructures.
On the basis of planned cash outflows to fund capital expenditures, the acquisition of Distrigaz, and shareholders remuneration, as well as certain expected divestments, management expects the Group’s leverage to achieve a lower level compared with 0.38 as reported in 2007, assuming the Company’s scenario for Brent prices at 112 $/barrel for the full-year and absent any further acquisitions.

Quarterly accounts set forth herein have been prepared in accordance with the evaluation and measurement criteria set by the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and adopted by the European Commission according to the procedure set forth in Article 6 of the European Regulation (CE) No. 1606/2002 of the European Parliament and European Council of July 19, 2002. Results are presented for the Second Quarter and the First Half of 2008 and for the Second Quarter and the First Half of 2007. Information on liquidity and capital resources relates to the end of the period as of June 30, 2008, March 31, 2008, and December 31, 2007. Tables contained in this press release are comparable with those presented in the management’s disclosure section of the Company’s annual report and interim report.
Non-GAAP financial measures and other performance indicators disclosed throughout this press release are accompanied by explanatory notes and tables to help investors to gain a full understanding of said measures in line with guidance provided by recommendation CESR/05-178b.

Eni’s Chief Financial Officer, Marco Mangiagalli in his position as manager responsible for the preparation of the Company’s financial reports, certifies pursuant to rule 154-bis paragraph 2 of Legislative Decree No. 58/1998, that data and information disclosed in this press release correspond to the Company’s evidence and accounting books and entries.

Cautionary statement
This press release, in particular the statements under the section “Outlook‘, contains certain forward-looking statements particularly those regarding capital expenditures, development and management of oil and gas resources, dividends, share repurchases, allocation of future cash flow from operations, future operating performance, gearing, targets of production and sales growth, new markets, and the progress and timing of projects. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors, including the timing of bringing new fields on stream; management’s ability in carrying out industrial plans and in succeeding in commercial transactions; future levels of industry product supply; demand and pricing; operational problems; general economic conditions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; development and use of new technology; changes in public expectations and other changes in business conditions; the actions of competitors and other factors discussed elsewhere in this document.

Due to the seasonality in demand for natural gas and certain refined products and the changes in a number of external factors affecting Eni’s operations, such as prices and margins of hydrocarbons and refined products, Eni’s results from operations and changes in net borrowings for the First Half of the year cannot be extrapolated on an annual basis.

* * *

Contacts
E-mail: segreteriasocietaria.azionisti@eni.it

Investor Relations
E-mail: investor.relations@eni.it
Tel.: +39 0252051651 - Fax: +39 0252031929

Eni Press Office
E-mail: ufficiostampa@eni.it
Tel.: +39 0252031287 - +39 0659822040

* * *

Eni
Società per Azioni Rome, Piazzale Enrico Mattei, 1
Capital Stock: euro 4,005,358,876 fully paid
Tax identification number 00484960588
Tel.: +39-0659821 - Fax: +39-0659822141

* * *

This press release for the Second Quarter of 2008 (unaudited) is also available on the Eni web site: www.eni.it.

About Eni
Eni is one of the leading integrated energy companies in the world operating in the oil and gas, power generation, petrochemicals, engineering and construction industries. Eni is present in 70 countries and is Italy’s largest company by market capitalization.