Our Path to Long Term Value - 2017-2020 Strategic Plan

Source Press Release
Company ENI S.p.A. 
Tags Strategy - Corporate
Date March 01, 2017

 Claudio Descalzi, Eni’s CEO, presents today the company’s 2017-2020 Strategic Plan to the financial community.

Eni is leveraging on its core strengths to build a broad portfolio of high margin opportunities, enabling it to capture upside as oil prices improve and defend value in future downturns.

Taking into account the Group’s transformation process and the targets set out in the plan, Eni intends to confirm a 2017 dividend of €0.8/share full cash. The distribution policy will be progressive based on underlying earnings growth and the macro environment.

Upstream

Hydrocarbon production is expected to grow by 3% per year across the 2017-2020 period. This will be achieved primarily by the ramp-up and start-up of new projects and the production optimization, which are expected to contribute around 850 kboed in 2020.

Exploration remains a fundamental value driver for the company. Throughout the plan, Eni expects to deliver new discoveries of 2-3 billion boe, almost two times the discoveries of the previous plan, by drilling around 120 wells in more than 20 countries. This will be achieved despite a 10% reduction in exploration CAPEX.

Eni’s portfolio flexibility, the success of its ongoing exploration strategy, synergies with existing assets and contract renegotiations will enable the average breakeven price of new projects to be approximately $30/bbl.


Gas and Power

Eni’s G&P business is expected to reach breakeven in 2017 and positive later on as it benefits from the alignment of gas supply contracts to market conditions and a reduction in logistics costs.

The G&P business has a new strategy: to go from being a leading European player to becoming the company’s global gas and LNG marketing arm, with a more integrated relationship with Upstream producing benefits.

G&P's new strategy will focus on:

  • Maximising the return of equity gas
  • Developing a competitive LNG portfolio
  • Transforming the retail business into a subsidiary

The EBIT from 2019 is expected to be in excess of €600 million.

Refining & Marketing and Chemicals

In order to address the structural weaknesses in the Refining sector, Eni’s target is to reduce its breakeven margin to around $3/bbl by 2018. To do this, Eni will leverage on:

  • Optimization in existing plans
  • Ramp up of the green refinery in Venice and start up of Gela, targeting over 1 mln tons of production
  • Logistic rationalization
  • Growth in marketing results through innovation and efficiency

This will generate a cumulative €3.3 billion contribution to cash flow from operations and an EBIT increase of €300 mln over the plan period, at a constant 2017 scenario.

In Chemicals, Eni plans to achieve an EBIT of around €300 mln per year and a cumulative operating cash flow of €1.2 bln thanks to:

  • Greater integration, optimization and flexibility
  • Refocusing on high margin specialities
  • Green chemicals and international expansion

Financial strategy

Investments over the four-year plan are focused on high value projects with accelerated returns and on the development of conventional assets. CAPEX of approximately €31.6 billion represents an 8% reduction at constant foreign exchange rates versus the previous plan, mostly related to upstream portfolio, project activity rescheduling and contract re-negotiations. This has been partially offset by the increased effort of around €500 mln in other businesses, mainly renewable energy, a growing component of Eni’s decarbonization strategy. Moreover, uncommitted CAPEX represents around 55% of total investments in 2019-2020, and gives Eni’s portfolio significant flexibility should the oil price scenario turn negative again in the future. The new disposal program targets €5-7 billion of asset sales primarily through the dilution of exploration assets, in line with our “dual exploration” model.

Source: EvaluateEnergy® ©2022 EvaluateEnergy Ltd