Eni SpA Q1 FY2025 earnings call

• Upstream: Johan Castberg began production, with five major start-ups this year setting up strong 2026; dual exploration valorization with sale of stakes in Baleine and Congo LNG to Vitol, MOU with Petronas for Indonesia and Malaysia assets.
• Transition businesses: Plenitude completed 200 MW battery in Texas and acquired solar/storage in CA; Enilive began SAF production at Gela; closed increases in EIP’s stake in Plenitude and KKR’s stake in Enilive, received non-binding offers for Plenitude stakes.
• Versalis transformation: Agreement reached with institutions and unions, Brindisi steam cracker closed, Priolo to shut down; expected EBIT improvement by 2030.
• First quarter results: Net income €1.4 billion up 60% QoQ; upstream production in line with expectations, await start-up impact for full year 1.7 million bpd average.

E&P Pro Forma EBIT was €3.3 billion, almost offsetting lower crude and production year-on-year helped by lower expenses and efficiency gains and portfolio grading. GGP results were in line with last year. Enilive and Plenitude reported Pro Forma results consistent with full year expectations once seasonality considered; Enilive impacted by biofuel margin deterioration and lower biorefinery utilization but partially offset by marketing ops, Plenitude had 3% EBITDA improvement. Refining and Chemicals in Transformation activities were loss-making, Refining due to weaker margins and lower throughputs, Chemicals due to challenging Europe scenario.

• Production: Confirm full year production outlook of 1.7 million barrel per day average.
• Cash flow: Cash flows before working capital €3.4 billion in quarter consistent with full year guidance of €13 billion at $75 per barrel; expect €11 billion cash flow from operations in lowered scenario, net CAPEX to below €6 billion, leverage between 0.15-0.2 in 2025.
• CAPEX: Quarter CAPEX €1.9 billion, below Feb guidance run-rate of €9 billion; expect to begin 2025 €1.5 billion buyback program after shareholder approval in May.

• Market volatility: Recurring feature, company needs to leverage cyclical upswings; macro scenario deteriorated, volatile and uncertain.
• Geopolitical: Concerns about Kazakhstan OPEC+ quotas impact on production.
• Enilive: Biofuel margins deteriorated year-on-year, lower biorefinery utilization.

Q: About guidance of production, thoughts on Kazakhstan OPEC plus quotas risk and Enilive margin outlook?

A: Guido Brusco on production outlook: five significant start-ups will help hit guidance; no production cuts engaged by Kazakhstan authority yet. Stefano Ballista on Enilive margin: year of oversupply, demand growth expected later, sustainable aviation fuel 2% EU target expected in second half, U.S. low carbon fuel standard delay but target still in place with flexibility.

Q: What will be needed price-wise or signal-wise to adjust activities more materially?

A: Francesco Gattei: flexibility in plan to adjust to lower prices, shifting investment, postponing/extending activities, efficiency measures, portfolio improvement, working capital management give flexibility to worsen scenario if needed.

Q: On asset sales, confidence in closing sale to Vitol and Plenitude thoughts?

A: Francesco Gattei: confident in West Africa deal, documents signed, waiting for approvals; non-binding offers for Plenitude, strong competition pressure, no mark provision impeding proceed. Guido Brusco on Namibia: well in Namibia penetrated target, reservoir shows good properties, flow rate over 11,000 bpd, well to be temporarily plugged and abandoned, assess full size of discovery.

Q: On buyback, what if macro deteriorates further? Thoughts on Argentina LNG project?

A: Francesco Gattei: confident in maintaining €1.5 billion buyback even in lower scenario, flexibility in managing distribution. Guido Brusco on Argentina: Vaca Muerta Basin integrated project, Eni joining YPF, expertise combination for success.

Q: On CAPEX cuts, which projects referred to? Namibia second discovery comparison?

A: Francesco Gattei: CAPEX cuts are broader activity, no specific major project; premature to compare Namibia second discovery, need to assess full size of discovery.

Q: On Cyprus gas, when expected production? Indonesia, Malaysia deal cash contribution?

A: Guido Brusco on Cyprus: FID within year, production expected between Q4 2027-Q1 2028; Francesco Gattei on Indonesia, Malaysia: new entity financial plan with contribution from asset combination.

Q: On cash flow from disposals, second quarter expected? E&P unit margin improvement?

A: Francesco Gattei: second quarter cashed €600 million from KKR deal, West African deal may slip to third quarter; Guido Brusco: EBIT per barrel improvement is structural due to high-grading portfolio.

Q: On cash flow mitigation, structural vs one-off? Refining margins?

A: Francesco Gattei: cash initiatives are structural, cost reduction related to lower scenario; Adriano Alfani on refining: margin expected to improve in second quarter, utilization increase, margin remain slightly better but not bullish like last year.

Q: On Enilive margin contribution, lease impact?

A: Stefano Ballista on Enilive: margin contribution is slightly positive, focus on value; Francesco Gattei on lease: expect increase during year as projects attract additional lease.

Q: On CAPEX allocation, activity vs efficiency? Refining and Chemicals margin outlook?

A: Francesco Gattei: CAPEX reduction mainly postpone activity with some structural variation; Adriano Alfani on chemicals: slight improvement in second quarter due to seasonality, expected cost reduction; Pino on refining: margin expected to improve mid-year due to driving season.

Q: On 2 billion mitigating initiatives time frame, GGP upside market condition?

A: Francesco Gattei: 2 billion initiatives executed within year; Unidentified Company Representative on GGP: renegotiation of supply/sales contracts in summer, market conditions like price increase and spreads/volatility can unlock value.

Q: On Venezuela impact, disposal proceeds in cash flow?

A: Guido Brusco on Venezuela: gas production for domestic use, engaging U.S. authorities to be compliant; Francesco Gattei on cash flow: disposal proceeds in cash flow statement, but structure is not straightforward.

Q: On balance sheet strength impact, buyback share price?

A: Francesco Gattei: strong balance sheet gives opportunity to manage volatility, select best levers; on buyback: will execute under policy, normal logic to buy back at lower price.