Between an average Brent price of 80 to 70 dollars per barrel, and a dollar / euro exchange rate of 1.15 to 1.24 between 2022 and 2025, Eni frames its strategy for the next 4 years. For the current one, an operational cash generation of 14 billion euros is expected, such as to strengthen the shareholder remuneration policy, bringing the total annual dividend from 0.86 to 0.88 euros per share and implementing a buyback program from 1.1 billion euros, which could grow with the barrel to over 90 dollars. From half-yearly, the coupon will become quarterly and will be paid in 4 equal installments in September and November 2022, and in March 2023 and May 2023.
This is the first news of the Capital day in which the CEO, Claudio Descalzi, presented the guidelines of the 2022-25 strategic plan, set on 5 guidelines: guaranteeing its customers energy security and reducing emissions; securing gas supplies to premium markets through a global portfolio; accelerate the path towards net absolute zero emissions scope 1 + 2 + 3 with reduction targets of 35% by 2030 and 80% by 2040 compared to 2018; allocate 30% of investments to new energy by 2025, and 60% by 2030; develop a business for sustainable mobility that combines biofuels and service stations.
But in the meantime the stock loses 3.5% to 12.64 euros and the market looks to the Russia-Ukraine crisis, to find out if Eni will be able to quickly find alternatives to Moscow gas. “The war in Ukraine is forcing us to see the world differently than we knew it,” Descalzi began. “This is a humanitarian tragedy, which has generated new threats to energy security and which we must address without abandoning our ambitions for a just energy transition. Our strategy has enabled us to be ready to face this challenge. Our response immediate to the current crisis was that of resorting to our consolidated alliances with producing countries to find substitute sources of energy to be used for European needs.
In the upstream business, production is expected to grow on average by 3% per year, with 1.7 million barrels equivalent per day in 2022 which will rise to approximately 1.9 million in 2025. The gas component will progressively grow up to 60% to 2030 and over 90% after 2040 and at the same time oil will reduce in the medium and long term. The exploration is expected to produce 2.2 billion barrels of new resources over the four-year plan, with a unit cost of exploration of less than 1.5 dollars. During the plan, Eni will put into production 11 major projects including Baleine in the Ivory Coast, Marine XII LNG in Congo, Coral in Mozambique, Dalma Gas in the UAE and other gas projects in Italy, Indonesia and Norway. Combined with the ramp-ups of already active fields, by 2025 they will add approximately 800 thousand barrels per day to the reference upstream production. Upstream is expected to generate an overall free cash flow of € 29 billion. As for the capex, this year starts with € 4.9 billion, and then settles on an average of € 4.5 billion. The capture and storage of CO2 is also part of the plan, with a target of around 10 million tons in 2030.
Descalzi also explained the choice to create a series of dedicated satellite companies that rely on our proprietary technologies, our efficient operating models and strong alliances with stakeholders. They are the future freshman Plenitude, Var Energi (listed in Oslo about a month ago), Azule (the joint venture with BP in Angola) and the spac Energy One, the first on the London list focused on the energy transition. “They highlight our commitment to attracting new investments and defining the right balance between resource allocation and their return”.
The next step concerns biorefineries, service stations and ride sharing activities, which will merge into a single entity dedicated to sustainable mobility. In particular, a capacity of up to 6 million Mtpa (million tons / year) is expected for the biorefineries over the next ten years. In the plan there is room for hydrogen and nuclear without fission. The first will contribute around 4 million Mtpa to the plan by 2050, while the second will be developed over the next 10 years, with the first commercial magnetic fusion plant. In ten years, these activities are expected to generate a positive Free cash flow, contributing 75% to that of the group from 2040. (reserved reproduction)
