- FINANCE, STRATEGY AND REPORTING
Enhanced shareholder remuneration
Strong operating and financial growth
Net Capex material reduction
“We are embracing the challenges created by the energy transition with a distinctive and accretive strategy creating value while addressing energy security and affordability needs, and decarbonization goals. We are growing our cashflows significantly while also differentiating our sources of cash and lowering our risks, expanding into new areas of opportunity linked to the energy transition. To support this we are executing on our deep portfolio in a disciplined manner, balancing investment with enhanced shareholder returns. As a result, we are developing an even more profitable, well diversified and more resilient Eni, while also enhancing shareholder distributions. Ultimately, it’s evident that the energy Transition can only become real if it creates material and sustainable returns and enables new forms of profitable business. And that is what we are doing.
Our upstream businesses continue to grow and generate strong cashflow with CFFO per barrel expected to rise by more than 30% over the Plan. Natural gas will continue expanding its share of production and we remain focused on capturing full margin from our mainly equity sourced midstream activities. E&P is highly differentiated by the continuing success of our leading exploration business and how this integrates into a distinctive fast-track development approach delivering competitive growth and securing value. Transition related businesses are a significant opportunity and will become increasingly important delivering even greater growth for Eni both in terms of activity and earnings. Together, Enilive, Plenitude, CCS and our Novamont/biochemistry activities represent a portfolio of business solutions to address customer needs to cut emissions. As these become increasingly important contributors to Eni’s cashflows they will diversify and meaningfully enhance our value. Enilive and Plenitude have established themselves as important businesses for us while CCS and biochemical, with Novamont, are two further segments under rapid maturation where we have a leadership position. Each of the Transition businesses are ideal candidates for our satellite model, reducing the capital absorption and highlighting their differentiated value.
Our CFFO will grow by 30% over the 4-year Plan with Plenitude and Enilive accounting for over 20% of this growth. At the end of the Plan Eni will be larger and more profitable with a group of competitively positioned businesses offering continued further growth and highly attractive returns. Our development is supported by disciplined investment where we have been able to reduce spend in the next 4 years by €2 billion, and net capex is 20% lower than last year’s Plan, thanks also to a raised net M&A contribution of €8 billion, reflecting the depth and quality of our portfolio and the further development of the Satellite model. All economic and financial KPIs demonstrate progress and robustness with a compelling trend of value growth, upside leverage and resilient downside. This has enabled us to make substantial enhancements to our distribution policy. We are raising our payout commitment, the 2024 dividend associated with it, and materially increasing the upside participation. Our distribution policy is highly competitive, implying at the current share price a distribution yield of 9%”.
Claudio Descalzi, Eni CEO
Rome, 14 March 2024 – Claudio Descalzi, Chief Executive Officer of Eni, today presented the Company’s Strategic Plan for 2024-2027.
Eni’s distinctive strategy addresses the challenges and maximises the opportunities presented by the energy market. It is delivering full value from its traditional businesses and skills, and at the same time fast-tracking development of new, high-return, high growth activities related to energy transition. This balanced approach of delivering affordable, secure and sustainable energy supply to Eni’s customers also provides the opportunity to generate competitive growth and returns for the Company and its investors.
In Natural Resources, Eni will continue to leverage its leading exploration business and secure and enhance value in the Upstream through its differentiated fast-track development approach, while continuing to reduce operated emissions. The gas component in production will continue to grow and GGP will help in its commercialization, ensuring Eni captures the full available margin. Carbon capture and storage, in which Eni has a leading position, will emerge as an important new Transition business during the Plan with significant growth beyond 2027.
In Energy Evolution, Eni sees material opportunities to grow both activity and earnings from new forms of energy. Plenitude and Enilive are examples of how Eni can build scale in Transition businesses with high growth rates and attractive returns. They will contribute to a transformation in the overall scale, diversification and resilience of the Eni model.
Business performance improvement and efficiency measures will also play an important role in Eni’s strategy. Versalis will be restructured and transformed to return to sustainable profitability while the Company expects to benefit from efficiency and simplification initiatives in its corporate structure.
With this notable operational progress, Eni will also deliver leading operating cashflow growth from an increasingly high quality of business. This will be allied to disciplined capital investment and a greater level of portfolio activity both of which result from the depth of the current opportunity set. Value creation and capital efficiency will be highlighted further by the progress Eni expects to make in the investment of aligned capital into its Satellites, and supported by a robust financial framework.
Natural Resources will be a dynamic and material value and cash generator for Eni, while delivering progressive decarbonization.
Eni will continue to follow a mainly organic strategy leveraging its highly distinctive exploration and market-leading fast track development expertise to grow production over the Plan period. GGP will continue to secure full value from the gas value chain, while expanding existing trading and optimization activities. CCUS will use existing infrastructure and depleted fields to capture and store CO2, both for the Company itself and as a service for others.
The considerable optionality and flexibility of its new projects also allows Eni to unlock value earlier, and to de-risk investments via active portfolio management, in line with a track record already established through its dual exploration model.
Exploration will continue to be a significant engine of value creation for Eni and it aims to invest more than €1.5 billion over the Plan.
Enilive, Plenitude and Versalis, along with CCS, represent a portfolio of Transition businesses with the prospect of strong growth and value creation, integrated with the existing business. Enilive has established itself as a leading bio-refiner, globally, differentiated through proprietary technology, the agri-hubs supply concept and a decade of operating experience. Plenitude, supplying low carbon and zero carbon energy to its customers has delivered outstanding operational and financial growth and is expected to continue on a strong trajectory. The value generated at Plenitude was confirmed with the recent investment by Energy Infrastructure Partners. Versalis results are expected to return to profitability as the Company applies a restructuring and transformation in response to the challenging results of 2023. Together these will be platforms for materially growing value over the Plan and beyond.
Eni has the financial resources and flexibility to execute strategy across the cycle. There is balance in the Plan for growth, long-term positioning and shareholder returns. Together with capital discipline and the advancement of value realization via a raised divestment program, the Company’s financial strategy is distinctive and robust.
In the past two years Eni has distributed €11billion, an historical record for the Company, approximating to 20% of the current market capitalization.
Shareholder remuneration is now to be further enhanced. Target payout in terms of dividend and buyback is to be raised to 30%-35% of CFFO from 25%-30% previously. Upside participation is also improved up to 60% from 35% of above Plan incremental cashflows. The proposed 2024 dividend is raised by over 6% to €1.00 per share from €0.94 cents, paid in quarterly installments, and the share buyback set at €1.1 billion and up to 3.5 billion.
Over the 4-year Plan period distributions are equivalent to 40% of the current market capitalization.
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