Eni S.p.A. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Strategic Highlights:
  • Azule Energy's Agogo West Hub in Angola/Namibia started production 29 months after FID, ahead of plan.
  • Vår reached 400,000 bpd production with Balder X and Johan Castberg ramp-up.
  • Joint venture FID on Coral North floating LNG offshore Mozambique, with startup in 2028.
  • Progress with YPF towards FID on Argentina LNG.
  • Sale of 30% stake in Baleine field in Ivory Coast.
  • Agreement with GIP on CCUS holding.
  • Approval to convert Sannazzaro refinery into biorefinery, aiming to triple biofuel production capacity by 2030.
• Financial Results: Q3 pro forma adjusted EBIT EUR 3 billion, 12% higher than Q2, minus 6% year-on-year in USD despite 14% fall in crude oil prices. Adjusted net income EUR 1.25 billion, in line year-on-year.

Segment Performance

• Upstream: Production was 1.76 million barrels per day, up 6% year-on-year reported and 8.5% underlying. Pro forma EBIT of EUR 2.6 billion. Over 800 million barrels of new resource added year-to-date in exploration.
• GGP: Pro forma EBIT of EUR 279 million in Q3, remaining focused on maximizing value and optimizing gas and LNG portfolio.
• Midstream: Significantly reconstructed midstream business delivering consistent financial performance.
• Transition Activities:
  • Enilive: Pro forma EBIT of EUR 233 million, corresponding to EUR 317 million EBITDA, around 23% up year-on-year. Bioomargin recovered to pre-2024 levels.
  • Plenitude: Pro forma EBIT of EUR 98 million, softer year-on-year due to retail incentives, but partially offset by strong growth in renewable capacity.
• Transformation:
  • Refining: Returned to profit helped by better industry margin and improved utilization.
  • Chemicals: Began to show benefit from restructuring, though scenario remains weak.

Guidance

• Full Year 2025:
  • Production expected between 1.71-1.72 million bpd, up from 1.7 million, 3% underlying increase vs 2024.
  • GGP pro forma EBIT over EUR 1 billion.
  • Cash initiative and self-help to deliver around EUR 4 billion benefit, up from EUR 3 billion.
  • Gross CapEx below EUR 8.5 billion, net CapEx less than EUR 5 billion, down from previous guidance.
  • Cash flow from operations pre-working capital raised to EUR 12 billion from EUR 11.5 billion.
  • Year-end pro forma leverage narrowed to 15%-18%.
  • Share buyback raised to EUR 1.8 billion from EUR 1.5 billion, with EUR 840 million completed by end of September.

Risks

• Market Volatility: Impact of crude oil price fluctuations and market conditions on financial performance.
• Regulatory Changes: Potential impact of new sanctions or regulations on operations, especially in relation to certain assets and partnerships.
• Operational Risks: Uncertainties related to project execution, start-ups, and ramp-ups, including potential delays or cost overruns.

Question and Answer

• Q: On Upstream production and Chemicals performance A: Guido Brusco discussed upstream production drivers including Norway, Johan Castberg, Balder X, and Mexico, Ghana, Nigeria, Ivory Coast; Adriano Alfani mentioned chemicals shutdown benefits starting in 2025-2026.
• Q: Outlook on production and LNG business A: Guido Brusco talked about strong exit rate, pipeline of projects, and LNG portfolio with target of 20 million tonnes per annum.
• Q: Buyback decision and Namibia wells A: Francesco Gattei discussed buyback factors related to performance and strategy; Guido Brusco provided update on Namibia wells with successful discoveries.
• Q: Argentina LNG and asset disposals A: Guido Brusco on Argentina LNG and tax; Francesco Gattei on Congo LNG disposal details.
• Q: Enilive and tax A: Stefano Ballista on Enilive performance; Francesco Gattei on tax rate improvements.
• Q: Disposals and net CapEx A: Francesco Gattei on disposal timelines and net CapEx guidance.
• Q: Biofuels and cash initiative A: Stefano Ballista on biofuels market; Francesco Gattei on cash initiative factors.
• Q: GGP business and Rosneft stake A: Cristian Signoretto on GGP performance and Rosneft impact; Francesco Gattei on Rosneft sanction impact.
• Q: Floating LNG and Enilive biorefinery A: Guido Brusco on floating LNG benefits; Giuseppe Ricci on Sannazzaro biorefinery.
• Q: Technology and working capital A: Lorenzo Fiorillo on AI technology progress; Francesco Gattei on working capital expectations.
• Q: Coral North reserve and buyback split A: Guido Brusco on Coral North reserve booking; Francesco Gattei on buyback split guidance.
• Q: Cash flow generation and 4-year plan A: Francesco Gattei on cash flow improvement drivers and 4-year plan context.