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Eni Regulatory Filings 2007

Mar 5, 2007

4348_ffr_2007-03-05_337f3dcf-c11f-4b2c-b378-99a582a278b8.zip

Regulatory Filings

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Table of Contents

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN ISSUER Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934

For the month of February 2007

Eni S.p.A. (Exact name of Registrant as specified in its charter)

Piazzale Enrico Mattei 1 - 00144 Rome, Italy (Address of principal executive offices)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F x Form 40-F o

(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2b under the Securities Exchange Act of 1934.)

Yes o No x

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): )

Table of Contents

TABLE OF CONTENTS TOC

Press Release dated February 12, 2007

Press Release dated February 22, 2007

Press Release dated February 23, 2007

Press Release dated February 23, 2007

Report on Preliminary Results for 2006

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorised.

Eni S.p.A.
Name: Fabrizio Cosco
Title: Company Secretary

Date: February 28, 2007

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PRESS RELEASE

Eni signs with Nigeria LNG the agreement for the purchase of 2 billion cubic meters per year of liquefied natural gas (LNG)

San Donato Milanese (Milan), 12 February 2007 – Eni signed today a twenty years Sale and Purchase Agreement (SPA) with Nigeria LNG (NLNG) Limited for the acquisition of 1.375 Million Tonnes per year (equivalent to approximately 2 billion cubic meters per year) of liquefied natural gas (LNG). LNG volume sold to Eni will be part of the volume which would be produced from the expansion plant in Bonny named "NLNG T7" which is expected to come into operation in 2012.

Nigeria LNG is a Nigerian Joint Venture company whose shareholders are Nigerian National Petroleum Corporation (49%), Shell (25.6%), TotalFinaElf (15%) and Eni (10.4%).

LNG will be delivered by Nigeria LNG to the terminal of Cameron, Louisiana, where Eni already holds a re-gasification capacity of some 6 bcm/year, and will be sold to the US market. The volumes of LNG delivered to Eni through this agreement represent some 17% of the whole production of Bonny’s Train 7 expansion.

This agreement will make a further sizeable contribution to Eni supplies' portfolio, enabling the company to strengthen its activities in the USA and its role as leading player in the global LNG market .

Company contacts:

Press office : +39 02.52031875 - +39 06.5982398 Switchboard: +39 0659821

[email protected]

[email protected]

Website: www.eni.it

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PRESS RELEASE

Eni acquires operated assets by Maurel & Prom in Congo for a total amount of US $ 1,434 million

Eni enhances its presence in Congo

San Donato Milanese (Milan), 22 February 2007 - Eni acquires large portion of the Congolese activities operated by Maurel & Prom, a French upstream company, listed on Euronext Paris Stock Exchange, and active in Africa, Europe and South America.

The transaction includes all Maurel & Prom interests in the producing fields of M’Boundi (48.6%) and Kouakouala A (66%), the production concession of Kouakouala B, C, D (50%) as well as most of the interests in the Kouilou (50%) exploration permit. All assets are located onshore in Congo.

The agreed price for the transaction is US $ 1,434 million, which includes the exploration asset for US $ 80 million.

The net equity production of the M’Boundi field is expected to be 17,000 bopd in 2007 and to grow to approximately 28,000 bopd in 2010, with an average increase of 18% per year in the 2007/2010 period, as a result of the implementation of a water injection program.

This giant field holds 1.4 billion boe of volume of original oil in place and produces a high quality oil (39 °API).

Through this acquisition, Eni’s entitlement production in Congo will increase from the 67,000 bpd recorded in 2006 to about 100,000 bpd in 2010 and the 2P equity reserves will increase by 126 million boe ($ 10.7 per barrel).

The deal is consistent with Eni’s strategy of acquiring hydrocarbons reserves and production in legacy countries where it plays an important role as operator and where it can add value by applying its core competencies.

The transaction is subject to the partners’ waiver of their pre-emption right on the M’Boundi Field and to the approval by the Congolese authorities.

Eni has been active in Congo since 1968 with exploration and development activities in which it has invested a total of US $3.9 billion. Overall production at December 31, 2006 was 407 million boe.

Banca Leonardo acted as financial advisor to Eni.

Company contacts:

Press office : +39 02.52031875 - +39 06.5982398 Switchboard: +39 0659821

[email protected] [email protected] [email protected]

Website: www.eni.it

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ENI ANNOUNCES PRELIMINARY RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2006

RECORD EARNINGS AND CASH FLOW

| • | Full year
dividend proposal: euro 1.25 per share, up 13.6%
(includes interim dividend of euro 0.60 per share paid in
October 2006) |
| --- | --- |
| • | Adjusted
net profit: down 1.7% to euro 2.35 billion for the fourth
quarter and up 12.5% to euro 10.41 billion for 2006 |
| • | Net
profit: down 27.8% to euro 1.52 billion for the fourth
quarter and up 4.9% to euro 9.22 billion for 2006 |
| • | Cash Flow:
euro 1.78 billion for the fourth quarter and euro 17
billion for 2006 |
| • | Total
shareholder return (a) : 14.8% in 2006 |
| • | Oil and natural gas
production was stable in the quarter; up 2% year on year |
| • | Gas sales in Europe
were down 1.5% in the quarter; up 4% year on year |

San Donato Milanese, February 23, 2007 - Eni, the international oil and gas company today announces its group results for the fourth quarter and for 2006 (unaudited).

Paolo Scaroni, Chief Executive Officer, commented: “ Full year 2006 results were a record, driven by continued improvements in performance and consistent execution of our strategy, in a broadly favourable trading environment. I am particularly pleased that the total shareholder return came in at an excellent 14.8%, one of the highest among our peers. Our disciplined approach to growth is the cornerstone of delivering superior results that generate attractive long term returns for our shareholders. ”

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

| 4,396 | 4,828 | 3,957 | (10.0 | ) | Summary Group results (million euro) — Operating
profit | 16,827 | 19,327 | 14.9 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 4,931 | 5,127 | 4,776 | (3.1 | ) | Adjusted operating profit (1) | 17,558 | 20,490 | 16.7 |
| 2,105 | 2,422 | 1,520 | (27.8 | ) | Net
profit (2) | 8,788 | 9,217 | 4.9 |
| 0.56 | 0.66 | 0.41 | (26.6 | ) | - per ordinary share (euro) (3) | 2.34 | 2.49 | 6.6 |
| 1.34 | 1.67 | 1.06 | (20.4 | ) | - per ADS
($) (3)(4) | 5.81 | 6.26 | 7.7 |
| 2,396 | 2,620 | 2,355 | (1.7 | ) | Adjusted net profit (1)(2) | 9,251 | 10,412 | 12.5 |
| 0.64 | 0.71 | 0.64 | | | - per
ordinary share (euro) (3) | 2.46 | 2.81 | 14.4 |
| 1.52 | 1.81 | 1.65 | 8.4 | | - per ADS ($) (3)(4) | 6.12 | 7.07 | 15.5 |

| (1) | For a
detailed explanation of adjusted operating profit and net
profit see page 19. |
| --- | --- |
| (2) | Profit
attributable to Eni shareholders. |
| (3) | Fully
diluted. Dollar amounts are converted on the basis of the
average EUR/USD exchange rate quoted by the ECB for the
periods presented. |
| (4) | One American
Depositary Share is equal to two Eni ordinary shares. |

(a) The Total Shareholder Return is a measure of the total return of a share calculated on a yearly basis, based on the change in price from the beginning and end of year, and dividends distributed and reinvested at the ex dividend date.

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Financial highlights Fourth Quarter

| • | Adjusted net profit was euro
2.35 billion, slightly down from a year ago (down 1.7%).
Adjusted operating profit of euro 4.78 billion decreased
3.1% from a year ago, due to the negative impact of the
8.5% appreciation of the euro versus the dollar, higher
exploratory expenses, and a weak refining performance. On
the positive side, the Gas & Power and Petrochemical
divisions posted better operating results. |
| --- | --- |
| • | Net borrowings increased by
euro 2.91 billion in the quarter to euro 6.76 billion, as
cash needs for capital expenditure of euro 2.94 billion,
the payment of an interim dividend of euro 2.21 billion
and the repurchase of 4.33 million of own shares at a
cost of euro 105 million exceeded net cash generated by
operating activities 1 of euro 1.78 billion and
a reduction in net borrowings as a result of exchange
rate differences. |

Full Year

| • | Revenues were up 16.8% to
euro 86.10 billion. |
| --- | --- |
| • | Adjusted net profit was euro
10.41 billion, up 12.5% from a year ago. This reflects a
better operating performance (up 16.7% to euro 20.49
billion), partly offset by a higher Group tax rate on an
adjusted basis, up 2.7 percentage points (from 46% to
48.7%). |
| • | Net cash generated by
operating activities totalled euro 17 billion allocated
as follows: euro 7.83 billion to capital expenditure and
euro 5.85 billion to shareholder distribution in terms of
dividends and share repurchase. The balance combined with
the positive impact of exchange rate differences
contributed to a euro 3.71 billion reduction in net
borrowings. |

| • | Repurchase of own shares: a
total of 53.13 million of own shares were purchased at a
cost of euro 1,241 million. Since the inception of the
share repurchase programme, a total of 335 million of own
shares were repurchased at a cost of euro 5,512 million,
reducing by approximately 8% the number of shares
outstanding and boosting 2006 earnings per share by the
same amount. |
| --- | --- |
| • | At year-end, the ratio of
net borrowings to shareholders’ equity including
minorities decreased to 0.16 from 0.27 at year-end 2005. |
| • | Return on average capital
employed (ROACE) 2 calculated on an adjusted
basis for the twelve-month period ending December 31,
2006 was 22.7% (20.5% in 2005). |

2006 Dividend The Board of Directors intends to submit to the Annual Shareholders’ Meeting the proposal of distributing a cash dividend of euro 1.25 per share 3 for 2006, up 13.6% as compared to 2005 (euro 1.10 per share). Included in this annual payment is euro 0.60 per share which was distributed as interim dividend in October 2006. The balance of euro 0.65 per share is payable on June 21, 2007 to shareholders on the register on June 18, 2007.

| (1) | See
disclaimer below. |
| --- | --- |
| (2) | Non-GAAP
financial measures disclosed throughout this press
release are accompanied by explanatory notes and tables
to help investors to gain a full understanding of said
measures in line with guidance provided for by CESR
recommendation No. 2005-178b. See pages 28 and 29 for
leverage, net borrowings and ROACE, respectively. |
| (3) | Dividends do
not entitle to a tax credit and, depending on the
receiver, are subject to a withholding tax on
distribution or are partially cumulated to the
receiver’s taxable income. |

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Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

| 1,806 | 1,709 | 1,796 | (0.6 | ) | Key operating data — Oil and
natural gas production (kboe/d) | 1,737 | 1,770 | 1.9 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 10,564 | 7,259 | 10,406 | (1.5 | ) | Natural gas sales in Europe (mmcf/d) | 9,076 | 9,435 | 4.0 | |
| 530 | 526 | 572 | 8.0 | | - of
which upstream sales | 563 | 544 | (3.4 | ) |
| | | | | | Retail sales of refined products in Europe | | | | |
| 247 | 260 | 248 | 0.4 | | Agip brand
(kbbl/d) | 248 | 249 | 0.4 | |
| 6.07 | 6.33 | 6.07 | | | Electricity sold production (TWh) | 22.77 | 24.82 | 9.0 | |

Fourth Quarter

| • | Oil and natural gas
production for the quarter averaged 1.8 mmboe/d, almost
unchanged compared with the fourth quarter of 2005,
despite the adverse impact of the loss of production at
the Venezuelan Dación oilfield (down 61 kbbl/d) as a
consequence of the unilateral cancellation of the service
contract for the field by the Venezuelan state oil
company PDVSA. Libya, Kazakhstan and the Gulf of Mexico
were the main growth areas. |
| --- | --- |
| • | Natural gas sales in Europe
were down 1.5% to 10,406 mmcf/d, due to mild weather
conditions affecting sales in Italy. This decrease was
partly offset by the growth in sales in a number of
target European markets and the build-up of supplies of
natural gas from Libya. |
| • | The trading environment was
supported by higher oil prices with average Brent crude
prices close to $60 per barrel, up 5% compared to the
fourth quarter of 2005, and improved selling margins on
natural gas and petrochemical products. These positives
were offset in part by the appreciation of the euro over
the dollar (up 8.5%) and a steep decline in refining
margins on the Brent crude marker (down 56.8%), partly
offset by the higher profitability of processed crudes. |

Full Year

| • | Oil and natural gas
production for the year averaged 1.77 mmboe/d, up 1.9%
compared with 2005. This included the loss of production
at the Venezuelan Dación oilfield (down 46 kbbl/d) and
lower entitlements in certain Production Sharing
Agreements (PSAs) 4 and buy-back contracts due
to higher oil and gas prices (down 21 kbbl/d). Eni
delivered its 3% production growth rate based on a $55
per barrel scenario, as announced in the 2006 quarterly
production outlook. Libya, Angola and Egypt were the main
growth areas. |
| --- | --- |
| • | Net proved reserves at
December 31, 2006 stood at 6.44 bboe (down 6% compare
with December 31, 2005), representing 10 years of
remaining production at the current rate. Organic proved
additions, as calculated by applying a year-end Brent
price of $58.93 per barrel, replaced 65% of production.
Assuming Brent is constant at $40 per barrel when
determining entitlements in PSAs, the three-year average
proved reserve replacement ratio would be 106%. |
| • | Natural gas sales in Europe
were up 4% to 9,435 mmcf/d driven primarily by the growth
in sales in a number of target European markets and the
build-up of supplies of natural gas from Libya. |
| • | Exploration activity: Eni
invested euro 1,348 million, a 106% increase compared to
2005, executing a huge exploration campaign leading to
the completion of 68 exploratory wells (36 net to Eni)
with a commercial rate of success of 43% (49% net to
Eni). A further 26 wells are in progress as of the
year-end and 152,000 square kilometres of new acreage has
been acquired (99% operated by Eni). |

(4) In PSAs the national oil company awards the execution of exploration and production activities to the international oil company (contractor). The contractor bears the mineral and financial risk of the initiative and, when successful, recovers capital expenditure and costs incurred in the year (Cost oil) by means of a share of production. This production share varies along with international oil prices. In certain PSAs changes in international oil prices also affect the share of production to which the contractor is entitled in order to remunerate its capital employed (Profit oil). A similar scheme applies to buy-back contracts.

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Outlook

Eni will present in detail its strategy, targets and outlook for its 2007-2010 plan at 15:00 CET today. The outlook for Eni in 2007 remains positive, with key business trends for the year as follows:

| • | production of liquids and
natural gas is forecast to remain on the same level
as 2006 (1.77 mmboe/d in 2006). Mature field decline in
Italy and in the North Sea is expected to be offset by a
growth in Libya, due to the build-up of the Western
Libyan Gas Project; |
| --- | --- |
| • | sales volumes of natural
gas in Europe are forecast to increase from 2006
levels (9,435 mmcf/d). Major increases are expected in
the Iberian Peninsula, German/Austrian and French
markets; |
| • | sold production of
electricity is expected to increase from 2006 levels
(24.82 TWh) due to the ramp-up of production capacity in
Brindisi and the planned start-ups of new capacity at the
Ferrara power plant; |
| • | refining throughputs on
Eni’s account are forecast to decline slightly
from 2006 (761 kbbl/d) due to the termination of the
contract for processing certain volumes of crude at the
Priolo refinery’s facilities owned by a third party,
to be offset by higher throughputs expected at Gela,
Livorno and Sannazzaro refineries; |
| • | retail sales of refined
products are expected to slightly increase in Italy
due to planned marketing initiatives, and in the rest of
Europe due to new acquisitions of service stations in
target markets. |

In 2007 management expects to increase capital expenditure from the 2006 level (euro 7.83 billion in 2006).

Increases will be apportioned to the development of oil and natural gas reserves, upgrading of refineries and the retail network, and upgrading of natural gas import and transport infrastructure.

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Disclaimer Due to the seasonality in demand for natural gas and certain refined products and the changes in a number of external factors affecting Eni’s operations, such as prices and margins of hydrocarbons and refined products, Eni’s results from operations and changes in net borrowings for the fourth quarter cannot be extrapolated on an annual basis.

Cautionary statement This press release, in particular the statements under the section "Outlook", contains certain forward-looking statements particularly those regarding capital expenditure, development and management of oil and gas resources, dividends, share repurchases, allocation of future cash flow from operations, future operating performance, gearing, targets of production and sale growth, new markets, and the progress and timing of projects. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors, including the timing of bringing new fields on stream; management’s ability in carrying out industrial plans and in succeeding in commercial transactions; future levels of industry product supply; demand and pricing; operational problems; general economic conditions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; development and use of new technology; changes in public expectations and other changes in business conditions; the actions of competitors and other factors discussed elsewhere in this document.

Contacts E-mailbox: [email protected]

Investor Relations: E-mailbox: [email protected]

Eni Press Office: E-mail: [email protected] Tel.: +39 0252031287 - +39 0659822040

Eni Società per Azioni Rome, Piazzale Enrico Mattei, 1 Capital Stock : euro 4,005,358,876 fully paid Registro Imprese di Roma, c. f. 00484960588 Tel . +39-0659821 - Fax +39-0659822141

This press release and Eni’s Report on the Preliminary Results for the Fourth Quarter and Full Year of 2006 (unaudited) are also available on the Eni web site: "www.eni.it".

About Eni Eni is one of the leading integrated energy companies in the world operating in the oil and gas, power generation, petrochemicals, engineering and construction industries. Eni is present in 73 countries and is Italy’s largest company by market capitalisation.

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Summary results for the fourth quarter and for 2006

(million euro)

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

21,506 20,366 21,416 (0.4 ) Net sales from operations 73,728 86,105 16.8
4,396 4,828 3,957 (10.0 ) Operating
profit 16,827 19,327 14.9
(209 ) 82 341 Exclusion of inventory holding (gains) losses (1,210 ) 88
744 217 478 Exclusion
special items: 1,941 1,075
of which:
290 21 182 -
non-recurring items 290 206
454 193 296 - other special items 1,651 869
4,931 5,127 4,776 (3.1 ) Adjusted
operating profit 17,558 20,490 16.7
2,105 2,422 1,520 (27.8 ) Net profit pertaining to Eni 8,788 9,217 4.9
(131 ) 30 213 Exclusion
of inventory holding (gains) losses (759 ) 33
422 168 622 Exclusion special items: 1,222 1,162
of
which:
290 19 199 - non-recurring items 290 218
132 149 423 - other
special items 932 944
2,396 2,620 2,355 (1.7 ) Adjusted net profit pertaining to Eni 9,251 10,412 12.5
102 90 178 74.5 Net profit
of minorities 459 606 32.0
2,498 2,710 2,533 1.4 Adjusted net profit 9,710 11,018 13.5
Break-down
by division:
1,572 1,958 1,304 (17.0 ) Exploration &
Production 6,186 7,279 17.7
640 472 873 36.4 Gas
& Power 2,552 2,862 12.1
221 257 115 (48.0 ) Refining &
Marketing 945 629 (33.4 )
64 4 141 120.3 Petrochemicals 227 174 (23.3 )
118 117 131 11.0 Engineering and
Construction 328 400 22.0
(90 ) (94 ) (85 ) (5.6 ) Other
activities (297 ) (301 ) (1.3 )
(46 ) (16 ) 57 .. Corporate and
financial companies (142 ) 54 ..
19 12 (3 ) .. Unrealized
profit in inventory (1) (89 ) (79 ) 11.2
2,498 2,710 2,533 1.4 9,710 11,018 13.5
Net
profit pertaining to Eni
0.56 0.66 0.41 (26.6 ) - per ordinary share (euro) 2.34 2.49 6.6
1.34 1.67 1.06 (20.4 ) - per ADS
($) 5.81 6.26 7.7
Adjusted net profit pertaining to Eni (2)
0.64 0.71 0.64 - per
ordinary share (euro) 2.46 2.81 14.4
1.52 1.81 1.65 8.4 - per ADS ($) 6.12 7.07 15.5
3,744.8 3,688.1 3,684.7 (1.6 ) Weighted
average number of outstanding shares (2) 3,763.4 3,701.3 (1.7 )
2,072 4,555 1,780 (14.1 ) Net cash provided by operating activities 14,936 17,003 13.8
2,464 1,835 2,944 19.5 Capital
expenditure 7,414 7,833 5.7

| (1) | Unrealized
profit in inventory concerned intra-group sales of goods
and services recorded at period end in the equity of the
purchasing business segment. |
| --- | --- |
| (2) | Assuming
dilution. |

Trading environment indicators

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

56.90 69.49 59.68 4.9 Average price of Brent dated crude oil (1) 54.38 65.14 19.8
1.189 1.274 1.290 8.5 Average
EUR/USD exchange rate (2) 1.244 1.256 1.0
47.86 54.55 46.26 (3.3 ) Average price in euro of Brent dated crude oil 43.71 51.86 18.6
5.05 4.27 2.18 (56.8 ) Average
European refining margin (3) 5.78 3.79 (34.4 )
4.25 3.35 1.69 (60.2 ) Average European refining margin in euro 4.65 3.02 (35.1 )
2.3 3.2 3.6 56.5 Euribor -
three month rate (%) 2.2 3.1 40.9
4.3 5.4 5.3 23.3 Libor - three month dollar rate (%) 3.5 5.2 48.6

| (1) | In USD
dollars per barrel. Source: Platt’s Oilgram. |
| --- | --- |
| (2) | Source: ECB. |
| (3) | In US dollars per barrel FOB
Mediterranean Brent dated crude oil. Source: Eni
calculations based on Platt’s Oilgram data. |

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Table of Contents

Results for the fourth quarter of 2006

Bottom line Eni’s net profit for the fourth quarter of 2006 was euro 1,520 million, down euro 585 million from the fourth quarter of 2005, or 27.8%, due essentially to: (i) a lower operating performance (down euro 439 million, or 10%), due to the adverse impact of the appreciation of the euro over the dollar (8.5%), higher exploration expenses and weaker refining activity, partly offset by the improved operating performance of the Gas & Power and Petrochemicals divisions; (ii) a higher Group tax rate, from 50.3% to 59.2% primarily due the Algerian Government’s introduction of a windfall tax on upstream earnings, effective from August 1, 2006. This included higher current taxation and a deferred tax charge (for a total of euro 328 million, of which euro 149 million pertaining to taxation for the period).

Eni’s adjusted net profit at euro 2,355 million was slightly down from the fourth quarter of 2005 (down 1.7%). Adjusted net profit is calculated by excluding an inventory holding loss of euro 213 million and special charges of euro 622 million (both amounts net of the related tax effect).

Special charges for the quarter were principally related to a deferred tax charge, reflecting the windfall tax levied by the Algerian Government as discussed above, asset impairments, consisting mainly of impairments of assets in the Exploration & Production and the Petrochemical divisions, risk provisions with respect to fines imposed by certain regulatory and antitrust Authorities, environmental provisions and redundancy incentives.

Divisional performance The following comments are based on adjusted net profit.

The decline in the Group adjusted net profit for the fourth quarter was attributable to a reduction of profits reported in the:

| • | Exploration &
Production division (down euro 268 million or 17%),
due to a lower operating performance (down euro 386
million) impacted by currency translation effects and
increased exploration expenses. These negatives were
partially offset by higher realisations in dollars (oil
up 5%; natural gas up 11.2%); |
| --- | --- |
| • | Refining & Marketing division
(down euro 106 million or 48%), due to a lower operating
performance (down euro 231 million) adversely impacted by
the weak refining environment (Brent margins were down
2.87 $/bbl or 56.8% from a year ago) and the appreciation
of the euro over the dollar, partly offset by the benefit
derived from the higher profitability of processed
crudes. Other negatives during the quarter included a
deterioration of operating results of marketing
activities in Italy due to the adverse impact of mild
weather conditions on sales of refined products for
heating uses. |

These decreases were partly offset by a better adjusted net profit reported in the:

| • | Gas & Power division
(up euro 233 million, or 36.4%), primarily reflecting the
benefit from the partial reversal of a provision accrued
in 2005 financial statements as an estimate of the impact
of regulation enacted by the Authority for Electricity
and Gas with resolution No. 248/2004. Operating
performance improved from a year ago as a result of
higher natural gas selling margins, supported by a
favourable trading environment. Volumes of natural gas
sold by consolidated subsidiaries (down 192 mmcf/d, or
2%) and volumes distributed through low pressure
pipelines to the Italian retail market were both down
from a year ago, due to mild weather conditions.
Increasing adjusted net profit for the sector was also a
result of the stronger performance of certain
equity-accounted entities; |
| --- | --- |
| • | Petrochemical division
(up euro 77 million, or 120.3%), reflecting an improved
operating performance (up euro 80 million) resulting from
a recovery in margins. |

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Table of Contents

Results for 2006

Bottom line Eni’s net profit for 2006 was a record euro 9,217 million, up euro 429 million compared to 2005, or 4.9%. This increase reflected a better operating performance (up euro 2,500 million), partially offset by a higher Group tax rate, which rose from 46.8% to 51.8%. The increase in the Group tax rate was recorded mainly in the Exploration & Production division due to: (i) the Algerian windfall tax on upstream earnings (euro 328 million, of which euro 149 million pertaining to taxation for the period); (ii) an increase in the supplemental tax rate implemented by the British Government, applicable to profit before taxes earned by operations in the North Sea, effective from the start of 2006, affecting both current taxation and deferred tax liabilities (euro 198 million, of which euro 107 million pertaining to taxation for the period).

Eni’s adjusted net profit for the year was up 12.5% to euro 10,412 million. Adjusted net profit is calculated by excluding an inventory holding loss of euro 33 million and special charges of euro 1,162 million (both amounts are net of the related fiscal effect).

Special charges for the year were principally related to asset impairments, mainly impacting assets in the Exploration & Production division, environmental provisions and redundancy incentives, risk provisions with respect to fines imposed by regulatory and antitrust Authorities, and a deferred tax charge, reflecting the windfall tax levied by the Algerian Government and the supplemental tax rate in the UK, as mentioned above.

Return on average capital employed (ROACE) calculated on an adjusted basis for the twelve-month period ending on December 31, 2006 was 22.7% (20.5% in 2005).

Eni’s results benefited from a favourable trading environment , with a higher Brent crude oil price (up 19.8% compared to 2005) and higher selling margins on petrochemical products. These positives were partially offset by declining refining margins (margin on Brent were down 34.4%). Selling margins on natural gas were underpinned by a favourable trading environment. The euro appreciated by 1% over the dollar.

Divisional performance The following comments are based on adjusted net profit.

Group adjusted net profit for the year was supported by the increase reported in the:

| • | Exploration &
Production division (up euro 1,093 million, or
17.7%), reflecting a better operating performance (up
euro 2,860 million) as a result of higher realisations in
dollars (oil up 22.4% and natural gas up 17.8%) combined
with increased production volumes sold (up 10.2 mmboe).
These positives were offset in part by higher operating
costs and amortisation charges, and increased exploration
expenses. Adjusted net profit for the year was also
negatively affected by the effects of exchange rates and
a higher tax rate from 51.8% to 53.9%; |
| --- | --- |
| • | Gas & Power division
(up euro 310 million, or 12.1%), reflecting a better
operating performance (up euro 351 million) resulting
from higher natural gas selling margins due to a
favourable trading environment and the reduced impact of
the tariff regime implemented by the Authority for
Electricity and Gas with Resolution No. 248/2004. Growth
in natural gas sales by consolidated subsidiaries (up 304
mmcf/d, or 3.8%) and in volumes transported outside Italy
contributed positively. On a negative note,
transportation activities in Italy posted lower operating
results due to the tariff regime enacted by the Authority
for Electricity and Gas with Resolution No. 166/2005 and
distribution activities suffered from lower volumes.
Adjusted net profit for the year was supported by a
better performance of certain equity-accounted entities; |
| • | Engineering and
Construction division (up euro 72 million, or 22%),
reflecting a better operating performance against the
backdrop of favourable trends in the demand for oilfield
services. |

These increases were partly offset by lower adjusted net profit reported in the Refining & Marketing division (down euro 316 million, or 33.4%), due to a poor operating performance (down euro 424 million) dragged down by a weak refining environment, the appreciation of the euro over the dollar and the impact of higher level of planned maintenance activity. Divisional results were also adversely impacted by the weaker performance of marketing activities in Italy due to lower sales as a consequence of the mild weather conditions of the fourth quarter.

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Net borrowings and cash flow Net borrowings as of December 31, 2006 amounted to euro 6,765 million, representing a decrease of euro 3,710 million from December 31, 2005. Net cash provided by operating activities totalled euro 17,003 million. Main cash outflows were: (i) financial requirements for capital expenditure and investments which totalled euro 7,928 million; (ii) dividend payments amounting to euro 4,832 million, of which euro 2,400 million pertained to the payment of the balance of the dividend for fiscal year 2005 and euro 2,210 million pertained to the payment of an interim dividend for fiscal year 2006 by the parent company Eni SpA, also Saipem SpA and Snam Rete Gas SpA distributed dividends amounting to euro 207 million; and (iii) the repurchase of shares for euro 1,241 million by Eni SpA and euro 477 million by Snam Rete Gas SpA and Saipem SpA. Cash from divestments (euro 328 million) and currency translation effects (approximately euro 650 million) also contributed to the reduction in net borrowings.

Leverage , the ratio of net borrowings to shareholders’ equity including minority interests decreased to 0.16, from 0.27 at December 31, 2005.

Net borrowings increased by euro 2,915 million from September 30, 2006 (euro 3,850 million) as cash inflow generated by operating activities (euro 1,780 million) partially covered the financial requirements for capital expenditure and investments amounting to euro 2,963 million, the payment of an interim dividend for fiscal year 2006 by the parent company Eni SpA (euro 2,210 million) and the repurchase of own shares for euro 105 million.

Repurchase of own shares In the period from January 1 to December 31, 2006, a total of 53.13 million own shares were purchased by the company for a total cost of euro 1,241 million (representing an average cost of euro 23.35 per share). Since the inception of the share buy-back programme (September 1, 2000), Eni has repurchased 335 million shares, equal to 8.36% of outstanding capital stock, at a total cost of euro 5,512 million (representing an average cost of euro 16.45 per share).

Capital expenditure 2006 capital expenditure amounted to euro 7,833 million (euro 7,414 million in 2005) and was primarily related to:

| • | the development of oil and
gas reserves (euro 3,629 million) in particular in
Kazakhstan, Angola, Egypt and Italy and exploration
projects (euro 1,348 million) particularly in Angola,
Egypt, Norway, Nigeria, the Gulf of Mexico and Italy,
including also the acquisition of 152,000 square
kilometres of new acreage (99% operated by Eni); |
| --- | --- |
| • | the upgrading and
maintenance of Eni’s natural gas transport and
distribution networks in Italy (euro 785 million); |
| • | ongoing construction of
combined cycle power plants (euro 229 million); |
| • | projects aimed at improving
flexibility and yields of refineries (euro 376 million),
including the start-up of construction of a new
hydrocracking unit at the Sannazzaro refinery, and
upgrading the refined product distribution network in
Italy and in the rest of Europe (euro 223 million); |
| • | the construction of a new
FPSO unit and upgrading of the fleet and logistic centres
in the Engineering and Construction segment (euro 591
million). |

Eni SpA parent company preliminary accounts for 2006

Eni’s Board of Directors also examined Eni SpA’s preliminary results for 2005 prepared in accordance with IFRSs, which showed net profit amounting to euro 5,821 million (euro 6,042 million in 2005) 5 . The euro 221 million decrease was primarily due to lower operating profit offset by higher net interest incomes and net income from investments, and lower income taxes.

Financial and operating information by division for the fourth quarter and for 2006 is provided in the following pages.

(5) Accounts of the parent company for 2005 closed with a net profit of euro 5,288 million in accordance with Italian GAAP. When restated in accordance with IFRS, 2005 net profit of the parent company amounts to euro 6,042 million.

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Exploration & Production

(million euro)

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

| 6,419 | | 6,562 | | 6,152 | (4.2 | ) | Results — Net sales
from operations | 22,531 | | 27,173 | | 20.6 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 3,561 | | 4,041 | | 3,141 | (11.8 | ) | Operating profit | 12,592 | | 15,580 | | 23.7 | |
| | | | | | | | Exclusion
of inventory holding (gains) losses | | | | | | |
| 20 | | 54 | | 54 | | | Exclusion of special items: | 311 | | 183 | | | |
| (43 | ) | 48 | | 51 | | | - asset
impairments | 247 | | 231 | | | |
| | | 3 | | (7 | ) | | - gains on disposal of assets | | | (61 | ) | | |
| 6 | | 3 | | 10 | | | -
provision for redundancy incentives | 7 | | 13 | | | |
| 57 | | | | | | | - provision to the reserve for contingencies | 57 | | | | | |
| 3,581 | | 4,095 | | 3,195 | (10.8 | ) | Adjusted
operating profit | 12,903 | | 15,763 | | 22.2 | |
| (21 | ) | (11 | ) | (22 | ) | | Net financial incomes (expenses) (d) | (80 | ) | (59 | ) | | |
| (10 | ) | 37 | | (18 | ) | | Net
incomes (expenses) from investments (d) | 10 | | 85 | | | |
| (1,978 | ) | (2,163 | ) | (1,851 | ) | | Income taxes (d) | (6,647) | | (8,510 | ) | 28.0 | |
| 55.7 | | 52.5 | | 58.7 | | | Adjusted
tax rate | 51.8 | | 53.9 | | | |
| 1,572 | | 1,958 | | 1,304 | (17.0 | ) | Adjusted net profit | 6,186 | | 7,279 | | 17.7 | |
| | | | | | | | Results
also include: | | | | | | |
| 1,265 | | 1,106 | | 1,414 | 11.8 | | - amortisations and depreciations | 4,101 | | 4,776 | | 16.5 | |
| 274 | | 255 | | 419 | 52.9 | | - of which amortisations of exploration
expenditure | 618 | | 1,075 | | 73.9 | |
| 1,517 | | 1,152 | | 1,937 | 27.7 | | Capital expenditure | 4,965 | | 5,203 | | 4.8 | |
| | | | | | | | Production (a) (b) | | | | | | |
| 1,132 | | 1,041 | | 1,079 | (4.7 | ) | Total liquids (c) (kbbl/d) | 1,111 | | 1,079 | | (2.9 | ) |
| 3,885 | | 3,849 | | 4,132 | 6.4 | | Natural
gas (mmcf/d) | 3,602 | | 3,955 | | 9.8 | |
| 1,806 | | 1,709 | | 1,796 | (0.6 | ) | Total hydrocarbons (kboe/d) | 1,737 | | 1,770 | | 1.9 | |
| | | | | | | | Average
realisations | | | | | | |
| 52.26 | | 65.20 | | 54.85 | 5.0 | | Liquids (c) ($/bbl) | 49.09 | | 60.09 | | 22.4 | |
| 171.27 | | 192.14 | | 190.39 | 11.2 | | Natural
gas ($/mmcf) | 158.94 | | 187.25 | | 17.8 | |
| 43.53 | | 52.21 | | 45.53 | 4.6 | | Total hydrocarbons ($/boe) | 41.06 | | 48.87 | | 19.0 | |
| | | | | | | | Average
oil marker price | | | | | | |
| 56.90 | | 69.49 | | 59.68 | 4.9 | | Brent dated ($/bbl) | 54.38 | | 65.14 | | 19.8 | |
| 47.86 | | 54.55 | | 46.26 | (3.3 | ) | Brent
dated (euro/bbl) | 43.71 | | 51.86 | | 18.6 | |
| 59.99 | | 70.38 | | 59.94 | (0.1 | ) | West Texas Intermediate ($/bbl) | 56.44 | | 66.00 | | 16.9 | |
| 432.96 | | 214.36 | | 235.20 | (45.7 | ) | Gas Henry
Hub ($/kmc) | 311.48 | | 238.02 | | (23.6 | ) |

| (a) | Supplementary
operating data is provided on page 32. |
| --- | --- |
| (b) | Includes
Eni’s share of production of equity-accounted
entities. |
| (c) | Includes
condensates. |
| (d) | Excluding
special items. |

Fourth Quarter result The adjusted operating profit of the Exploration & Production division totalled euro 3,195 million, down euro 386 million or 10.8% from the fourth quarter of 2005 reflecting primarily:

| • | an adverse impact of
approximately euro 331 million resulting from the
appreciation of the euro versus the dollar; |
| --- | --- |
| • | an increased exploration
expense (up euro 145 million; euro 159 million on a
constant exchange rate basis). |

These negatives were partly offset by higher realisations in dollars (oil up 5%, natural gas up 11.2%). The adjusted net profit was euro 1,304 million, down euro 268 million from the fourth quarter of 2005, also impacted by a higher tax rate, from 55.7% to 58.7%, primarily due to the Algerian windfall tax.

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Full year result The adjusted operating profit for the year was euro 15,763 million, up euro 2,860 million, reflecting higher realisations in dollars combined with higher sold production volumes (up 10.2 mmboe or 1.7%), partly offset by increased production costs and amortisation charges, an increased exploration expense, and the adverse impact of the appreciation of the euro versus the dollar. This better operating performance was partly offset by an increase in the adjusted tax rate (from 51.8% to 53.9%), resulting in a 17.7% increase in the adjusted net profit for the year.

Special items Special charges excluded from the adjusted operating profit were euro 54 million in the fourth quarter and euro 183 million in 2006 relating primarily to asset impairments. Other special charges for the quarter included primarily the deferred tax impact of the Algerian windfall tax for euro 179 million. For the full year, other special charges also included the deferred tax impact of the supplemental tax rate applicable to the profit earned in the North Sea enacted by the British Government, and a charge for the settlement of a taxation proceeding against a Venezuelan authority, for a combined amount of euro 342 million.

Fourth Quarter production Oil and natural gas production in the fourth quarter averaged 1,796 kboe/d virtually unchanged from the fourth quarter of 2005 (down 0.6%). Production for the quarter was impacted by the unilateral cancellation of the Dación field contract by the Venezuelan state company PDVSA with effect from April 1, 2006 (down 61 kboe/d). Production increases were driven primarily by start-ups/full production of large gas projects (Libya, Nigeria, Australia and Croatia) and liquid production growth in Libya, the United States and Kazakhstan, where the positive contribution was offset in part by mature field decline and the impact of outages and disruptions in Nigeria due to security issues.

Daily production of oil and condensates for the fourth quarter (1,079 kbbl) increased mainly in Libya due to new production, in the United States, due to further progress in the recovery of production at facilities damaged by hurricanes in the third and fourth quarters of 2005 and in Kazakhstan due to a better field performance. Production decreased in Venezuela and Nigeria.

Daily production of natural gas for the fourth quarter (4,132 mmcf/d) increased mainly in Libya (achievement of full production at the Bahr Essalam field), Nigeria (start-up of trains 4 and 5 of the Bonny LNG plant), Australia (start-up of the gas phase of the Bayu Undan field) and Croatia (start-up of the Ika, Ida and Ivana C-K fields). Declines in production were attributable mainly to mature field decline in Italy and in the United Kingdom.

Full year production and proved reserves For the full year, daily production of oil and gas averaged 1,770 kboe/d, increasing by 33 kboe/d from 2005 (up 1.9%), despite the impact of the loss of production of the Dación oil field in Venezuela and of adverse entitlement effects. Libya, Angola and Egypt were the main growth areas.

Daily production of oil and condensates for the full year (1,079 kbbl) increased mainly in Angola and Libya. Daily production of natural gas for the full year (3,955 mmcf/d) increased mainly in Libya, Egypt and Nigeria, partly offset by mature field decline in Italy.

Eni’s proved reserves of oil and natural gas at December 31, 2006 stood at 6,436 million boe (oil and condensates 3,481 million barrels; natural gas 2,955 million boe), decreasing 401 million boe from December 31, 2005, or 6%.

Changes in Eni’s 2006 proved reserves are as follows:

(mboe)

| Net proved reserves at December 31, 2005 — Revisions,
extensions and discoveries and improved recovery | 417 | | 6,837 | |
| --- | --- | --- | --- | --- |
| Production | (646 | ) | (229 | ) |
| | | | 6,608 | |
| Divestment of proved property | | | (2 | ) |
| Unilateral
cancellation by PDVSA of the contract concerning the
Dación field | | | (170 | ) |
| Net proved reserves at December 31, 2006 | | | 6,436 | |

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Additions to proved reserves booked in 2006 were 417 million boe and derived from: (i) extensions and discoveries (161 million boe) in particular in Kazakhstan, Algeria, Libya and Egypt; (ii) improved recovery (105 million boe), in particular, in Algeria, Angola, Egypt and Nigeria, and (iii) net upward revisions of 151 million boe mainly in Kazakhstan, Egypt and Libya.

The unilateral cancellation of the service contract for the Dación oilfield by the Venezuelan state oil company PDVSA determined a decrease in the Eni’s proved reserves of 170 million barrels. In 2006 Eni’s proved reserves replacement ratio 6 was 65% (38% all sources, including the loss of proved reserves at the Venezuelan Dación oilfield and other disposals) representing 10 years of remaining production at the current rate (10.8 as at December 31, 2005). Considering the adverse entitlement impact in certain PSAs and buy-back contracts resulting from higher oil prices (Brent price was 58.925 dollars/barrel at December 31, 2005) and assuming Brent constant at $40 per barrel when determining entitlements in PSAs, the three-year average proved reserve replacement ratio would be 106%.

At December 31, 2006, Eni’s proved developed reserves stood at 4,059 million boe (oil and condensates 2,144 million barrels, natural gas 1,915 million boe) or 63% of total proved reserves (63% as of December 31, 2005).

(6) Ratio of changes in proved reserves for the year resulting from revisions of previously reported reserves, improved recovery, extensions, discoveries and sales or purchases of minerals in place, to production for the year. A ratio higher than 100% indicates that more proved reserves were added than produced in a year. The Reserve Replacement Ratio is a measure used by management to indicate the extent to which production is replaced by proved oil and gas reserves booked according with the Securities Exchange Commission (SEC) criteria under the S-X Regulation, Rule 4-10. The Reserve Replacement Ratio is not an indicator of future production because the ultimate development and production of reserves is subject to a number of risks and uncertainties. These include the risks associated with the successful completion of large-scale projects, including addressing ongoing regulatory issues and completion of infrastructure, as well as changes in oil and gas prices, political risks and geological and other environmental risks.

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Gas & Power

(all figures in millions of euro, except where indicated)

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

| 7,419 | | 5,265 | | 8,170 | 10.1 | | Results — Net sales
from operations | 22,969 | | 28,368 | 23.5 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 641 | | 592 | | 1,303 | 103.3 | | Operating profit | 3,321 | | 3,802 | 14.5 | |
| (32 | ) | (6 | ) | (41 | ) | | Exclusion
of inventory holding (gains) losses | (127 | ) | (67 | ) | |
| 281 | | 33 | | 7 | | | Exclusion of special items | 337 | | 147 | | |
| | | | | | | | of which: | | | | | |
| 290 | | 24 | | (2 | ) | | Non-recurring items | 290 | | 22 | | |
| (9 | ) | 9 | | 9 | | | Other
special items: | 47 | | 125 | | |
| 1 | | | | | | | - asset impairments | 1 | | 51 | | |
| 3 | | 3 | | 2 | | | -
environmental provisions | 31 | | 44 | | |
| 3 | | 5 | | 15 | | | - provisions for redundancy incentives | 8 | | 37 | | |
| (16 | ) | 1 | | (8 | ) | | - other | 7 | | (7 | ) | |
| 890 | | 619 | | 1,269 | 42.6 | | Adjusted operating profit | 3,531 | | 3,882 | 9.9 | |
| 516 | | 186 | | 832 | 61.2 | | Market
and Distribution | 1,777 | | 2,062 | 16.0 | |
| 254 | | 230 | | 286 | 12.6 | | Transport in Italy | 1,162 | | 1,087 | (6.5 | ) |
| 109 | | 140 | | 144 | 32.1 | | Transport
outside Italy | 448 | | 579 | 29.2 | |
| 11 | | 63 | | 7 | (36.4 | ) | Power generation | 144 | | 154 | 6.9 | |
| 13 | | 6 | | (1 | ) | | Net
financial incomes (expenses) (a) | 37 | | 16 | | |
| 76 | | 100 | | 97 | | | Net incomes (expenses) from investments (a) | 370 | | 489 | | |
| (339 | ) | (253 | ) | (492 | ) | | Income
taxes (a) | (1,386 | ) | (1,525 | ) | |
| 34.6 | | 34.9 | | 36.0 | | | Adjusted tax rate (%) | 35.2 | | 34.8 | | |
| 640 | | 472 | | 873 | 36.4 | | Adjusted
net profit | 2,552 | | 2,862 | 12.1 | |
| 411 | | 311 | | 453 | 10.2 | | Capital expenditure | 1,152 | | 1,174 | 1.9 | |
| | | | | | | | Natural
gas sales (mmcf/d) | | | | | |
| 6,015 | | 3,605 | | 5,470 | (9.1 | ) | Italy to third parties * | 5,077 | | 4,944 | (2.6 | ) |
| 564 | | 576 | | 595 | 5.5 | | Own
consumption * | 536 | | 593 | 10.6 | |
| 2,702 | | 2,038 | | 3,063 | 13.4 | | Rest of Europe * | 2,268 | | 2,687 | 18.5 | |
| 85 | | 104 | | 46 | (45.9 | ) | Outside
Europe | 113 | | 74 | (34.5 | ) |
| 9,366 | | 6,323 | | 9,174 | (2.0 | ) | Sales to third parties and own
consumption of consolidated companies | 7,994 | | 8,298 | 3.8 | |
| 788 | | 621 | | 756 | (4.1 | ) | Natural
gas sales of affiliates (net to Eni) | 685 | | 741 | 8.2 | |
| 12 | | | | 4 | .. | | Italy | 7 | | 2 | (71.4 | ) |
| 741 | | 514 | | 702 | (5.3 | ) | Rest
of Europe | 626 | | 666 | 6.4 | |
| 35 | | 107 | | 50 | 42.9 | | Outside Europe | 52 | | 73 | 40.4 | |
| 10,015 | | 6,944 | | 9,930 | (2.2 | ) | Total
natural gas sales and own consumption | 8,679 | | 9,039 | 4.1 | |
| 10,564 | | 7,259 | | 10,406 | (1.5 | ) | Sales of natural gas in Europe | 9,077 | | 9,436 | 4.0 | |
| 10,034 | | 6,733 | | 9,834 | (2.0 | ) | G&P in
Europe * | 8,514 | | 8,892 | 4.4 | |
| 530 | | 526 | | 572 | 8.0 | | Upstream in Europe | 563 | | 544 | (3.4 | ) |
| 8,464 | | 7,301 | | 8,617 | 1.8 | | Transport
of natural gas in Italy (mmcf/d) | 8,234 | | 8,513 | 3.4 | |
| 5,662 | | 4,641 | | 5,746 | 1.5 | | Eni | 5,310 | | 5,524 | 4.0 | |
| 2,802 | | 2,660 | | 2,871 | 2.5 | | On behalf
of third parties | 2,924 | | 2,990 | 2.3 | |
| 6.07 | | 6.33 | | 6.07 | 0.0 | | Electricity production sold (TWh) | 22.77 | | 24.82 | 9.0 | |

| (a) | Excluding
special items. |
| --- | --- |
| * | Market
segments with asterisk merge into "G&P in
Europe". |

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Fourth Quarter result The adjusted operating profit of the Gas & Power division totalled euro 1,269 million, up euro 379 million or 42.6% from the fourth quarter of 2005 reflecting primarily:

| • | the partial reversal of a
provision accrued in the 2005 financial statements as an
estimate of the impact of regulation enacted by the
Authority for Electricity and Gas with resolution No.
248/2004 7 ; |
| --- | --- |
| • | higher natural gas selling
margins supported by a favourable trading environment,
relating, in particular, to movements in the euro vs. the
dollar exchange rate. |

These positive factors were partly offset by a decline in natural gas sales by consolidated subsidiaries (down 192 mmcf/d or 2%) and lower volumes distributed through low pressure pipelines to the Italian retail market due to mild weather conditions. The adjusted net profit of the Gas & Power division increased by euro 233 million also reflecting the increased contribution of certain equity-accounted entities, in particular Unión Fenosa Gas in Spain.

Full year result For the full year, the adjusted operating profit of the Gas & Power division rose 9.9% to euro 3,882 million, primarily reflecting higher selling margins on natural gas due to a favourable trading environment and the reduced impact of the tariff regime enacted by the Authority for Electricity and Gas with Resolution No. 248/2004. Growth in natural gas sales by consolidated subsidiaries (up 304 mmcf/d, or 3.8%), in electricity production sold (up 2.05 TWh, or 9%) and in volumes transported outside Italy due to the coming on stream of volumes transported through the GreenStream gasline from Libya contributed positively. These positives were partly offset by a lower operating result from transportation activities in Italy due to the tariff regime implemented by the Authority for Electricity and Gas with Resolution No. 166/2005 and a lower operating result from distribution activities due to lower volumes. Also, higher purchase costs were incurred in the first quarter of the year, owing to a climatic emergency. Full year adjusted net profit was up euro 310 million to euro 2,862 million, also benefiting from the improved performance of certain equity-accounted entities.

Special items Special charges for the quarter (euro 7 million) referred to redundancy incentives. Special charges for the full year recorded in the operating profit (euro 147 million) included certain of non-recurring charges pertaining to fines imposed by the Authority for Electricity and Gas, as well as asset impairments, redundancy incentives and environmental provisions. Other special items pertained to Eni’s share of a gain recorded by the Galp affiliate on the sale of a regulated gas asset.

Fourth Quarter sales Natural gas sales in Europe for the fourth quarter amounted to 10,406 mmcf/d (including own consumption and sales by affiliates), down 158 mmcf/d from the fourth quarter of 2005 due primarily to the negative impact of mild weather conditions on sales in the Italian market (down 522 mmcf/d, or 7.9%). All market segments posted lower volumes: the thermoelectric sector (down 154 mmcf/d), the residential and commercial sector (down 154 mmcf/d), the wholesaler sector (down 149 mmcf/d) and the industrial sector (down 88 mmcf/d). The decline in the domestic market was partly offset by growth in other European target markets, up 322 mmcf/d or 9.4%, in particular:

| • | sales under long-term supply
contracts to Italian importers were up 184 mmcf/d; and |
| --- | --- |
| • | supplies to the Turkish,
Austrian and German and French markets. |

In the fourth quarter of 2006, electricity production sold was flat.

Full year sales In 2006, natural gas sales in Europe increased by 359 mmcf/d to 9,436 mmcf/d, reflecting a growth in the rest of Europe (up 459 mmcf/d, or 15.9%), particularly sales to Italian importers and sales to Turkey, the Iberian Peninsula, Austria, Germany and France. This increase was partly offset by a decrease in sales in Italy (down 81 mmcf/d, or 1.4%), with all market segments posting lower sales with the exception of the industrial segment and the build up of supplies to feed Eni’s own power plants. In 2006, electricity production sold increased by 2.05 TWh to 24.82 TWh (up 9%), reflecting the continuing ramp-up of new production capacity, in particular at the Brindisi plant (up 3.05 TWh), whose effects were offset in part by the standstill of the Ravenna power plant (down 0.85 TWh).

(7) The impact of the regulatory regime was determined based on the indexation mechanism set out by Resolution No. 248/2004 from the Authority for Electricity and Gas, and certain resolutions enacting Resolution No. 248/2004, this in spite of the fact that Resolution No. 248/2004 was annulled by an administrative body due to certain formal flaws.

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Refining & Marketing

(all figures in millions of euro, except where indicated)

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

9,555 10,185 8,579 (10.2 ) Results — Net sales from operations 33,732 38,210 13.3
329 250 (386 ) .. Operating
profit 1,857 319 (82.8 )
(177 ) 83 386 Exclusion of inventory holding (gains) losses (1,064 ) 215
227 30 148 Exclusion
of special items 421 256
of which:
109 Non-recurring
items 109
227 30 39 Others special items: 421 147
5 13 -
impairments 5 14
157 23 27 - environmental charges 337 111
13 6 30 -
provision for redundancy incentives 22 47
8 1 (4 ) - provision to the reserve for contingencies 39 8
44 (35 ) - other 18 (33 )
379 363 148 (60.9 ) Adjusted operating profit 1,214 790 (34.9 )
29 42 31 Net
incomes (expenses) from investments (a) 231 184
(187 ) (148 ) (64 ) Income taxes (a) (500 ) (345 )
45.8 36.5 35.8 Adjusted
tax rate (%) 34.6 35.4
221 257 115 (48.0 ) Adjusted net profit 945 629 (33.4 )
317 137 272 (14.2 ) Capital
expenditure 656 645 (1.7 )
Global indicator refining margin
5.05 4.27 2.18 (56.8 ) Brent
($/bbl) 5.78 3.79 (34.4 )
4.25 3.35 1.69 (60.2 ) Brent (€/bbl) 4.65 3.02 (35.1 )
7.73 6.82 4.87 (37.0 ) Ural
($/bbl) 8.33 6.50 (22.0 )
Refining throughputs and sales (kbbl/d)
715 679 718 0.4 Refining
throughputs on own account Italy 684 667 (2.5 )
98 97 95 (3.1 ) Refining throughputs on own account Rest of
Europe 91 94 3.3
572 570 584 2.1 Refining
throughputs of wholly-owned refineries 547 543 (0.7 )
100 100 100 Utilisation rate of balanced capacity (%) 100 100
175 178 171 (2.3 ) Retail
sales Italy Agip brand 175 173 (1.1 )
Retail sales Italy IP brand 26 ..
72 82 77 6.9 Retail
sales Rest of Europe 73 76 4.1
225 195 205 (8.9 ) Wholesale Italy 210 202 (3.8 )
86 85 84 (2.3 ) Wholesale
Rest of Europe 82 84 2.4
9 8 8 (11.1 ) Wholesale Rest of World 8 8
517 491 501 (3.1 ) Other
sales 459 480 4.6
1,084 1,039 1,046 (3.5 ) Sales 1,033 1,023 (1.0 )
Refined
product sales by region (kbbl/d)
624 593 602 (3.5 ) Italy 606 598 (1.3 )
159 167 161 1.3 Rest of
Europe 155 160 3.2
301 279 283 (6.0 ) Rest of World 271 264 (2.6 )

(a) Excluding special items.

-15 -

Table of Contents

Fourth Quarter result The adjusted operating profit of the Refining & Marketing division was euro 148 million, down euro 231 million, or 60.9% from the fourth quarter of 2005 reflecting primarily:

| • | lower realised refining
margins attributable to an unfavourable trading
environment (Brent margins were down $2.87/bbl or 56.8%
from a year ago), exacerbated by the negative impact of
the appreciation of the euro over the dollar. These
negatives were partly offset by the benefit deriving from
the higher profitability of processed crudes; and |
| --- | --- |
| • | the decline in operating
performance of Italian marketing activities due to the
adverse impact of mild weather conditions on sales of
refined products for heating uses. |

The adjusted net profit for the fourth quarter was euro 115 million, down euro 106 million, or 48%, from the fourth quarter of 2005, primarily reflecting the decrease in the operating profit.

Full year result The adjusted operating profit for the full year was euro 790 million, down euro 424 million, or 34.9%, from a year ago primarily reflecting:

| • | lower realised refining
margins reflecting the unfavourable trading environment
and the appreciation of the euro versus the dollar,
combined with the impact of longer refinery standstills
due to planned maintenance, partly offset by the higher
profitability of processed crudes; |
| --- | --- |
| • | the decline in the operating
performance of Italian marketing activities due to lower
volumes sold which were negatively affected by the mild
weather conditions registered in the fourth quarter, and
the divestment of Italiana Petroli carried out in
September 2005. |

On the positive side marketing activities in the rest of Europe performed well as a result of higher retail margins and higher volumes sold.

The adjusted net profit for the full year was euro 629 million, down euro 316 million, or 33.4%, from 2005, primarily reflecting the decrease in the operating profit.

Special items Special charges excluded from the adjusted operating profit were euro 148 million in the fourth quarter and euro 256 million for the full year, reflecting primarily the impact of a non recurring charge related to a fine imposed by the Italian Antitrust Authority, and environmental provisions and provisions for redundancy incentives.

Fourth Quarter throughputs and sales Refining throughputs on Eni’s own account for the fourth quarter of 2006 in Italy and outside Italy were 813 kbbl/d, broadly consistent with the fourth quarter of 2005, due principally to higher throughputs processed at the Venice, Livorno and Taranto refineries. This was partly offset by lower volumes processed at the Sannazzaro refinery, the Gela refinery, the third party Priolo refinery (as a result of the accident occurred late in April) and in the Czech Republic. Sales of refined products for the fourth quarter decreased by 38 kbbl/d to 1,046 kbbl/d, compared to the fourth quarter of 2005, due to lower sales on both the Agip branded network and the wholesale markets in Italy (down 24 kbbl/d), partly offset by increased volumes sold in retail markets of the rest of Europe (up 5 kbbl/d). Sales in the retail market in Italy decreased by 4 kbbl/d to 171 kbbl/d, due primarily to increased competition. Sales on the wholesale market in Italy decreased by 20 kbbl/d to 205 kbbl/d, due primarily to the impact of mild weather adversely affecting heating product sales (LPG and home-heating oil). Sales in retail markets in the rest of Europe increased by 5 kbbl/d to 77 kbbl/d, as a result of an increased market share in Germany and the effect of the purchase and lease of service stations in Spain.

Full year throughputs and sales Refining throughputs on Eni’s own account for the full year were 761 kbbl/d, down 14 kbbl/d, or 1.8%, than 2005, owing to lower throughputs on third parties refineries (mainly in Priolo). Steady refining throughputs were achieved at Eni’s own refineries as a result of improved performance at the Venice refinery, partly offset by the impact of planned maintenance standstills of the Sannazzaro and Livorno refineries.

-16 -

Table of Contents

The wholly-owned refineries utilisation rate was 100% reflecting balanced capacity.

For the full year, sales of refined products decreased by 10 kbbl/d to 1,023 kbbl/d, due primarily to lower sales on both the Agip branded network and the wholesale markets in Italy (down 10 kbbl/d), partly offset by increased volumes sold in the rest of Europe (up 5 kbbl/d).

The 26 kbbl/d of lost retail sales in Italy due to the divestment of Italiana Petroli carried out in September 2005 was partially offset by Eni’s ongoing supply of significant volumes of fuels and other products to the divested company under a five-year supply contract.

Sales of refined products on the Agip branded network in Italy declined by 2 kbbl/d to 173 kbbl/d, due to competitive pressures; market share decreased from 29.7% to 29.3%. Sales on the wholesale market in Italy decreased by 8 kbbl/d to 202 kbbl/d, due primarily to the decline registered in the fourth quarter, as mentioned above. Sales of refined products increased in both the retail and wholesale markets in the rest of Europe, principally in Germany and Spain.

  • 17 -

Table of Contents

Summarized Group profit and loss account

(million euro)

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

21,506 21,146 21,416 (0.4 ) Net sales from operations 73,728 86,105 16.8
318 109 288 (9.4 ) Other
income and revenues 798 769 (3.6 )
(15,684 ) (14,147 ) (15,860 ) (1.1 ) Operating expenses (51,918 ) (61,126 ) (17.7 )
(290 ) (24 ) (182 ) - of
which non-recurring items (290 ) (206 )
(1,744 ) (1,500 ) (1,887 ) (8.2 ) Depreciation, amortisation and writedowns (5,781 ) (6,421 ) (11.1 )
4,396 4,828 3,957 (10.0 ) Operating
profit 16,827 19,327 14.9
(98 ) (42 ) 52 .. Net financial (expense) income (366 ) 161 ..
146 279 157 7.5 Net income
from investments 914 903 (1.2 )
4,444 5,065 4,166 (6.3 ) Profit before income taxes 17,375 20,391 17.4
(2,237 ) (2,553 ) (2,468 ) (10.3 ) Income
taxes (8,128 ) (10,568 ) (30.0 )
50.3 50.4 59.2 Tax rate (%) 46.8 51.8
2,207 2,512 1,698 (23.1 ) Net profit 9,247 9,823 6.2
of which:
2,105 2,422 1,520 (27.8 ) - net
profit pertaining to Eni 8,788 9,217 4.9
102 90 178 74.5 - net profit of minorities 459 606 32.0
2,105 2,422 1,520 (27.8 ) Net profit pertaining to Eni 8,788 9,217 4.9
(131 ) 30 213 Exclusion
of inventory holding (gain) loss (759 ) 33
422 168 622 Exclusion special items: 1,222 1,162
290 19 199 -
non-recurring items 290 218
132 149 423 - other special items 932 944
2,396 2,620 2,355 (1.7 ) Adjusted
net profit pertaining to Eni (1) 9,251 10,412 12.5

(1) Adjusted operating profit and net profit adjusted net profit are before inventory holding gains or losses and special items. For an explanation of these measure and reconciliation of adjusted operating profit and net profit to reported operating profit and net profit see below.

  • 18 -

Table of Contents

NON-GAAP Measures

Reconciliation of reported operating profit and net profit to results on an adjusted basis

Management evaluates Group and business performance on the basis of adjusted operating profit and adjusted net profit, which are arrived at by excluding inventory holding gains or losses and special items. Further, finance charges on finance debt, interest income, charges or income deriving from the fair value evaluation of derivative financial instruments held for trading purposes, and exchange rate differences are excluded when determining adjusted net profit of each business segment. Taxation effect of such items excluded from adjusted net profit is determined based on the specific rate of taxes applicable to each item, with the exception for finance charges or income, which the Italian statutory tax rate of 33% is applied to. Adjusted operating profit and adjusted net profit are non-GAAP financial measures under either IFRS, or U.S. GAAP. Management includes them to help facilitate comparison of base business performance across periods and to allow financial analysts to evaluate Eni’s trading performance on the basis of their forecasting models. In addition, management uses segmental adjusted net profit when calculating return on capital employed by each business segment.

The following is a description of items which are excluded from the calculation of adjusted results.

Inventory holding gain or loss is the difference between the cost of sales of the volumes sold in the period based on the cost of supplies of the same period and the cost of sales of the volumes sold in the period calculated using the weighted-average cost method of inventory accounting.

Special items include certain relevant incomes or charges pertaining to: (i) either infrequent or unusual events and transactions, being identified as non recurring items under such a circumstance; or (ii) certain events or transactions which are not considered to be representative of the ordinary course of business, as in the case of environmental provisions, restructuring charges, asset impairments or write ups and gains or losses on divestments even though they occurred in past exercises or are likely to occur in future ones. As provided for in Decision No. 15519 of July 27, 2006 of the Italian market regulator (CONSOB), non recurring material income or charges are to be clearly reported in the management’s discussion and in financial tables.

Finance charges or incomes related to net borrowings excluded from the adjusted net profit of business segments are comprised of interest charges on finance debt and interest income earned on cash and cash equivalents not related to operations. Also the effect of the fair value evaluation of derivative financial instruments held for trading purposes and exchange rate differences are excluded from the adjusted net profit of business segments. Therefore, the adjusted net profit of business segments includes finance charge or income deriving from certain segment-operated assets, i.e. interest income on certain receivable financing and securities related to operations and finance charge pertaining to the accretion of certain provisions recorded on a discounted basis (as in the case of the asset retirement obligations in the Exploration & Production segment).

For a reconciliation of adjusted operating profit and adjusted net profit to reported operating profit and net profit see tables below.

  • 19 -

Table of Contents

| Fourth
Quarter 2006 |
| --- |
| (million
euro) |

Reported operating profit 3,141 1,303 (386 ) 72 149 ) (89 ) (12 ) 3,957
Exclusion
of inventory holding (gains) losses (41 ) 386 (4) 341
Exclusion of special items
of
which:
Non-recurring (income) charges (2 ) 109 13 62 182
Other
special charges: 54 9 39 73 3 82 36 296
environmental
charges 2 27 62 11 102
asset
impairments 51 13 50 1 12 127
gains on disposal
of assets (7 ) (7 )
provisions
to the reserve for contingencies 4 11 15
provision for
redundancy incentives 10 15 30 14 2 1 29 101
other (8 ) (35 ) (2 ) 7 (4 ) (42 )
Special items of operating profit 54 7 148 86 3 144 36 478
Adjusted
operating profit 3,195 1,269 148 154 152 (77 ) (53 ) (12 ) 4,776
Net financial (expense) income * (22 ) (1 ) (7 ) 87 57
Net income
from investments * (18 ) 97 31 1 47 (1 ) 1 158
Income taxes * (1,851 ) (492 ) (64 ) (14 ) (68 ) 22 9 (2,458 )
Adjusted
tax rate (%) 58.7 36.0 35.8 49.2
Adjusted net profit 1,304 873 115 141 131 (85 ) 57 (3 ) 2,533
of
which:
- net profit of minorities 178
-
adjusted net profit pertaining to Eni 2,355
Reported net profit pertaining to Eni 1,520
Exclusion
of inventory holding (gains) losses 213
Exclusion of special items: 622
-
non-recurring (income) charges 199
- other special charges 423
Adjusted
net profit pertaining to Eni 2,355

  • Excluding special items.

  • 20 -

Table of Contents

| Fourth
Quarter 2005 |
| --- |
| (million
euro) |

Reported operating profit 3,561 641 329 37 135 (297 ) (41 ) 31 4,396
Exclusion
of inventory holding (gains) losses (32 ) (177 ) (209 )
Exclusion of special items
of
which:
Non-recurring (income) charges 290 290
Other
special charges: 20 (9 ) 227 37 7 205 (33 ) 454
environmental
charges 3 157 146 8 314
asset
impairments (43 ) 1 5 11 4 47 2 27
gains on disposal
of assets
provisions
to the reserve for contingencies 8 6 (4 ) (119 ) (109 )
increase insurance
charges 57 6 30 17 4 64 178
provision
for redundancy incentives 6 3 13 4 3 3 12 44
other (22 ) 14 (1 ) 9
Special
items of operating profit 20 281 227 37 7 205 (33 ) 744
Adjusted operating profit 3,581 890 379 74 142 (92 ) (74 ) 31 4,931
Net
financial (expense) income * (21 ) 13 (91 ) (99 )
Net income from investments * (10 ) 76 29 2 46 (1 ) 142
Income
taxes * (1,978 ) (339 ) (187 ) (12 ) (70 ) 2 120 (12 ) (2,476 )
Adjusted tax rate (%) 55.7 34.6 45.8 49.8
Adjusted
net profit 1,572 640 221 64 118 (90 ) (46 ) 19 2,498
of which:
- net
profit of minorities 102
- adjusted net profit pertaining to Eni 2,396
Reported
net profit pertaining to Eni 2,105
Exclusion of inventory holding (gains) losses (131 )
Exclusion
of special items: 422
- non-recurring (income) charges 290
- other
special charges 132
Adjusted net profit pertaining to Eni 2,396

  • Excluding special items.

  • 21 -

Table of Contents

| Third
Quarter 2006 |
| --- |
| (million
euro) |

Reported operating profit 4,041 592 250 31 145 ) (65 ) 19 4,828
Exclusion
of inventory holding (gains) losses (6 ) 83 5 82
Exclusion of special items
of
which:
Non-recurring (income) charges 24 24
Other
special charges: 54 9 30 1 91 8 193
environmental
charges 3 23 12 38
asset
impairments 48 6 54
gains on disposal
of assets 3 3
provisions
to the reserve for contingencies 1 53 54
provision for
redundancy incentives 3 5 6 4 15 2 35
other 1 (3 ) 5 6 9
Special items of operating profit 54 33 30 1 91 8 217
Adjusted
operating profit 4,095 619 363 37 145 (94 ) (57 ) 19 5,127
Net financial (expense) income * (11 ) 6 (34 ) (39 )
Net income
from investments * 37 100 42 27 206
Income taxes * (2,163 ) (253 ) (148 ) (33 ) (55 ) 75 (7 ) (2,584 )
Adjusted
tax rate (%) 52.5 34.9 36.5 48.8
Adjusted net profit 1,958 472 257 4 117 (94 ) (16 ) 12 2,710
of
which:
- net profit of minorities 90
-
adjusted net profit pertaining to Eni 2,620
Reported net profit pertaining to Eni 2,422
Exclusion
of inventory holding (gains) losses 30
Exclusion of special items: 168
-
non-recurring (income) charges 19
- other special charges 149
Adjusted
net profit pertaining to Eni 2,620

  • Excluding special items.

  • 22 -

Table of Contents

Full Year 2006
(million
euro)
Reported operating profit 15,580 3,802 319 172 505 ) (296 ) (133 ) 19,327
Exclusion
of inventory holding (gains) losses (67 ) 215 (60 ) 88
Exclusion of special item
of
which:
Non-recurring (income) charges 22 109 13 62 206
Other
special charges: 183 125 147 94 3 261 56 869
environmental
charges 44 111 126 11 292
asset
impairments 231 51 14 50 1 22 369
gains on disposal
of assets (61 ) (61 )
provisions
to the reserve for contingencies 8 31 75 114
provision for
redundancy incentives 13 37 47 19 2 17 43 178
other (7 ) (33 ) (6 ) 21 2 (23 )
Special items of operating profit 183 147 256 107 3 323 56 1,075
Adjusted
operating profit 15,763 3,882 790 219 508 (299 ) (240 ) (133 ) 20,490
Net financial (expense) income * (59 ) 16 (7 ) 205 155
Net income
from investments * 85 489 184 2 66 5 831
Income taxes * (8,510 ) (1,525 ) (345 ) (47 ) (174 ) 89 54 (10,458 )
Adjusted
tax rate (%) 53.9 34.8 35.4 48.7
Adjusted net profit 7,279 2,862 629 174 400 (301 ) 54 (79 ) 11,018
of
which:
- net profit of minorities 606
-
adjusted net profit pertaining to Eni 10,412
Reported net profit pertaining to Eni 9,217
Exclusion
of inventory holding (gains) losses 33
Exclusion of special items: 1,162
-
non-recurring (income) charges 218
- other special charges 944
Adjusted
net profit pertaining to Eni 10,412

  • Excluding special items.

  • 23 -

Table of Contents

Full Year 2005
(million
euro)
Reported operating profit 12,592 3,321 1,857 202 307 ) (377 ) (141 ) 16,827
Exclusion
of inventory holding (gains) losses (127 ) (1,064 ) (19 ) (1,210 )
Exclusion of special items
of
which:
Non-recurring (income) charges 290 290
Other
special charges: 311 47 421 78 7 638 149 1,651
environmental
charges 31 337 413 54 835
asset
impairments 247 1 5 29 4 75 2 363
gains on disposal
of assets
provisions
to the reserve for contingencies 39 36 126 201
increase insurance
charges 57 6 30 17 4 64 178
provision
for redundancy incentives 7 8 22 4 3 6 29 79
other 1 (12 ) (8 ) 14 (5 )
Special
items of operating profit 311 337 421 78 7 638 149 1,941
Adjusted operating profit 12,903 3,531 1,214 261 314 (296 ) (228 ) (141 ) 17,558
Net
financial (expense) income * (80 ) 37 (296 ) (339 )
Net income from investments * 10 370 231 3 141 (1 ) 23 777
Income
taxes * (6,647 ) (1,386 ) (500 ) (37 ) (127 ) 359 52 (8,286 )
Adjusted tax rate (%) 51.8 35.2 34.6 46.0
Adjusted
net profit 6,186 2,552 945 227 328 (297 ) (142 ) (89 ) 9,710
of which:
- net
profit of minorities 459
- adjusted net profit pertaining to Eni 9,251
Reported
net profit pertaining to Eni 8,788
Exclusion of inventory holding (gains) losses (759 )
Exclusion
of special items: 1,122
- non-recurring (income) charges 290
- other
special charges 932
Adjusted net profit pertaining to Eni 9,251

  • Excluding special items.

  • 24 -

Table of Contents

Analysis of special items

(million euro)

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 Full Year 2005 Full Year 2006

Special items
of
which:
290 24 182 Non-recurring (income) charges 290 206
454 193 296 Other
special charges: 1,651 869
314 38 102 environmental
charges 835 292
27 54 127 asset
impairments 363 369
3 (7 ) gains on disposal
of assets (61 )
69 54 15 provisions
to the reserve for contingencies 379 114
178 - of which:
increase insurance charges 178
44 35 101 provision
for redundancy incentives 79 178
9 (42 ) other (5 ) (23 )
744 217 478 Special
items of operating profit 1,941 1,075
(1 ) 3 5 Net financial (expense) income 27 (6 )
(4 ) (73 ) 1 Net income
from investments (137 ) (72 )
of which:
gain on
the disposal of Italiana Petroli (IP) (135 )
(73 ) gain on Galp Energia SGPS SA (disposal of gas
assets to Rede Electrica National) (73 )
(317 ) 21 138 Income
taxes (609 ) 165
of which:
91 supplemental
tax rate UK 91
179 windfall tax
Algeria 179
(16 ) 2 legal
proceeding in Venezuela 77
422 168 622 Total special items of net profit 1,222 1,162

Adjusted operating profit by division

(million euro)

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

| 3,581 | | 4,095 | | 3,195 | | (10.8 | ) | Adjusted operating profit — Exploration
& Production | 12,903 | | 15,763 | | 22.2 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 890 | | 619 | | 1,269 | | 42.6 | | Gas & Power | 3,531 | | 3,882 | | 9.9 | |
| 379 | | 363 | | 148 | | (60.9 | ) | Refining
& Marketing | 1,214 | | 790 | | (34.9 | ) |
| 74 | | 37 | | 154 | | 108.1 | | Petrolchemicals | 261 | | 219 | | (16.1 | ) |
| 142 | | 145 | | 152 | | 7.0 | | Engineering
and Construction | 314 | | 508 | | 61.8 | |
| (92 | ) | (94 | ) | (77 | ) | 16.3 | | Other activities | (296 | ) | (299 | ) | (1.0 | ) |
| (74 | ) | (57 | ) | (53 | ) | 28.4 | | Corporate
and financial companies | (228 | ) | (240 | ) | (5.3 | ) |
| 31 | | 19 | | (12 | ) | | | Unrealized profit in inventory | (141 | ) | (133 | ) | | |
| 4,931 | | 5,127 | | 4,776 | | (3.1 | ) | | 17,558 | | 20,490 | | 16.7 | |

  • 25 -

Table of Contents

Adjusted net profit by division

(million euro)

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

| 1,572 | | 1,958 | | 1,304 | | (17.0 | ) | Adjusted net profit — Exploration
& Production | 6,186 | | 7,279 | | 17.7 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 640 | | 472 | | 873 | | 36.4 | | Gas & Power | 2,552 | | 2,862 | | 12.1 | |
| 221 | | 257 | | 115 | | (48.0 | ) | Refining
& Marketing | 945 | | 629 | | (33.4 | ) |
| 64 | | 4 | | 141 | | 120.3 | | Petrolchemicals | 227 | | 174 | | (23.3 | ) |
| 118 | | 117 | | 131 | | 11.0 | | Engineering
and Construction | 328 | | 400 | | 22.0 | |
| (90 | ) | (94 | ) | (85 | ) | 5.6 | | Other activities | (297 | ) | (301 | ) | 1.3 | |
| (46 | ) | (16 | ) | 57 | | .. | | Corporate
and financial companies | (142 | ) | 54 | | .. | |
| 19 | | 12 | | (3 | ) | .. | | Unrealized profit in inventory | (89 | ) | (79 | ) | (11.2 | ) |
| 2,498 | | 2,710 | | 2,533 | | 1.4 | | | 9,710 | | 11,018 | | 13.5 | |
| | | | | | | | | of which: | | | | | | |
| 102 | | 90 | | 178 | | 74.5 | | Net profit
of minorities | 459 | | 606 | | 32.0 | |
| 2,396 | | 2,620 | | 2,355 | | (1.7 | ) | Adjusted net profit pertaining to Eni | 9,251 | | 10,412 | | 12.5 | |

  • 26 -

Table of Contents

Summarised Group balance sheet 1

Summarised group balance sheet aggregates the amount of assets and liabilities derived from the statutory balance sheet in accordance with functional criteria which consider the enterprise conventionally divided into the three fundamental areas focusing on resource investments, operations and financing. Management believes that this Summarised group balance sheet is useful information in assisting investors to assess Eni’s capital structure and to analyse its sources of funds and investments in fixed assets and working capital. Management uses the Summarised group balance sheet to calculate key ratios such as return on capital employed (ROACE) and the proportion of net borrowings to shareholders’ equity (leverage) intended to evaluate whether Eni’s financing structure is sound and well-balanced.

(million euro)

12.31.2005 09.30.2006 12.31.2006 Change vs 12.31.2005 Change vs 09.30.2006

| Fixed assets — Property,
plant and equipment, net | 45,013 | | 43,408 | | 44,309 | | (704 | ) | 901 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Other tangible assets | | | 656 | | 629 | | 629 | | (27 | ) |
| Inventories
- compulsory stock | 2,194 | | 1,962 | | 1,827 | | (367 | ) | (135 | ) |
| Intangible assets, net | 3,194 | | 3,285 | | 3,756 | | 562 | | 471 | |
| Investments,
net | 4,311 | | 4,234 | | 4,267 | | (44 | ) | 33 | |
| Accounts receivable financing and securities
related to operations | 775 | | 640 | | 557 | | (218 | ) | (83 | ) |
| Net
accounts payable in relation to capital expenditure | (1,196 | ) | (912 | ) | (1,090 | ) | 106 | | (178 | ) |
| | 54,291 | | 53,273 | | 54,255 | | (36 | ) | 982 | |
| Net
working capital | | | | | | | | | | |
| Inventories | 3,563 | | 4,440 | | 4,743 | | 1,180 | | 303 | |
| Trade
accounts receivable | 14,101 | | 12,858 | | 15,195 | | 1,094 | | 2,337 | |
| Trade accounts payable | (8,170 | ) | (8,136 | ) | (10,546 | ) | (2,376 | ) | (2,410 | ) |
| Taxes
payable and reserve for net deferred income tax
liabilities | (4,857 | ) | (6,867 | ) | (5,372 | ) | (515 | ) | 1,495 | |
| Reserve for contingencies | (7,679 | ) | (7,741 | ) | (8,604 | ) | (925 | ) | (863 | ) |
| Other
operating assets and liabilities (2) | (526 | ) | (553 | ) | (601 | ) | (75 | ) | (48 | ) |
| | (3,568 | ) | (5,999 | ) | (5,185 | ) | (1,617 | ) | (814 | ) |
| Employee
termination indemnities and other benefits | (1,031 | ) | (1,054 | ) | (1,076 | ) | (45 | ) | (22 | ) |
| Capital employed, net | 49,692 | | 46,220 | | 47,994 | | (1,698 | ) | 1,774 | |
| Shareholders’
equity including minority interests | 39,217 | | 42,370 | | 41,229 | | 2,012 | | (1,141 | ) |
| Net borrowings | 10,475 | | 3,850 | | 6,765 | | (3,710 | ) | 2,915 | |
| Total
liabilities and shareholders’ equity | 49,692 | | 46,220 | | 47,994 | | (1,698 | ) | 1,774 | |

| (1) | For a
reconciliation to the statutory balance sheet see Eni's
Report on the first half of 2006 "Reconciliation of
summarized group balance sheet and statement of cash
flows to statutory schemes" pages 45 and 46. |
| --- | --- |
| (2) | Include
operating financing receivables and securities related to
operations for euro 246 million (euro 492 million and
euro 261 million at December 31, 2005 and September 30,
2006 respectively) and securities covering technical
reserves of Padana Assicurazioni SpA for euro 417 million
(euro 463 million and euro 550 million at December 31,
2005 and September 30, 2006 respectively). |

  • 27 -

Table of Contents

Leverage and Net Borrowings

Leverage is a measure of a company’s level of indebtedness, calculated as the ratio between net borrowings which is calculated by excluding cash and cash equivalents and certain very liquid assets from financial debt and shareholders’ equity, including minority interests. Management makes use of leverage in order to assess the soundness and efficiency of the Group balance sheet in terms of optimal mix between net borrowings and net equity, and to carry out benchmark analysis with industry standards. In the medium term, management plans to maintain a strong financial structure targeting a level of leverage up to 0.40.

(million euro)

12.31.2005 09.30.2006 12.31.2006 Change vs 12.31.2005 Change vs 09.30.2006

Debts and bond 12,998 11,006 11,697 (1,301 ) 691
Cash and
cash equivalents (1,333 ) (6,459 ) (3,985 ) (2,652 ) 2,474
Securities not related to operations (931 ) (418 ) (552 ) 379 (134 )
Non-operating
financing receivables (259 ) (279 ) (395 ) (136 ) (116 )
Net borrowings 10,475 3,850 6,765 (3,710 ) 2,915
Shareholder’s
equity including minority interest 39,217 42,370 41,229 2,012 (1,141 )
Leverage 0.27 0.09 0.16 (0.11 ) 0.07

Changes in shareholders' equity

(million euro)

| Shareholder’s equity at December 31,
2005 — Net profit
for the period | 9,823 | |
| --- | --- | --- |
| Dividends to shareholders | (4,610 | ) |
| Shares
repurchased | (1,241 | ) |
| Issue of ordinary share capital for employee
share incentive schemes | 85 | |
| Dividends
paid by consolidated subsidiaries to shareholders | (222 | ) |
| Effect on equity of the shares repurchased by
consolidated subsidiaries (Snam Rete Gas/Saipem) | (306 | ) |
| Exchange
differences from translation of financial statements
denominated in currencies other than euro | (1,628 | ) |
| Other changes | 111 | |
| Total
changes | | 2,012 |
| Shareholder’s equity at December 31,
2006 | | 41,229 |

  • 28 -

Table of Contents

ROACE (Return On Average Capital Employed)

Return on Average Capital Employed for the Group, on an adjusted basis is the return on Group average capital invested, calculated as the ratio between net adjusted profit before minority interests, plus net finance charges on net borrowings, less the related tax effect and net average capital employed. The tax rate applied on finance charges is the Italian statutory tax rate of 33%. The capital invested as of period-end used for the calculation of net average capital invested is obtained by deducting inventory gains or losses as of the period, rectified from the related tax effect. ROACE by business segment is determined as the ratio between adjusted net profit and net average capital invested pertaining to each business segment and rectifying the net capital invested as of period-end, from net inventory gains or losses (after applying the business segment specific tax rate).

| (million
euro) — Full
year 2006 | E&P | G&P | R&M | Eni |
| --- | --- | --- | --- | --- |

Adjusted net profit for the period 7,279 2,862 629 11,018
Exclusion
of after-tax financial expenses 79
Adjusted net profit unlevered 7,279 2,862 629 11,097
Capital
employed net
- at the begining of period 20,206 18,978 5,933 49,692
- at the
end of period 18,590 18,891 5,766 48,027
Average capital employed, net 19,398 18,935 5,880 48,860
ROACE (%) 37.5 15.1 10.7 22.7

| (million
euro) — Full
year 2005 | E&P | G&P | R&M | Eni |
| --- | --- | --- | --- | --- |

Adjusted net profit for the period 6,186 2,552 945 9,710
Exclusion
of after tax financial expenses 42
Adjusted net profit unlevered 6,186 2,552 945 9,752
Capital
employed net
- at the begining of period 17,954 18,387 5,081 45,983
- at the
end of period 20,206 18,898 5,326 48,933
Average capital employed, net 19,080 18,643 5,204 47,458
ROACE (%) 32.4 13.7 18.2 20.5
  • 29 -

Table of Contents

Summarised Group cash flow statement 1

Eni’s summarised group cash flow statement derives from the statutory statement of cash flows. It allows to create a link between changes in cash and cash equivalents (deriving from the statutory cash flows statement) occurring from the beginning of period to the end of period and changes in net borrowings (deriving from the summarised cash flow statement) occurring from the beginning of period to the end of period. The measure enabling to make such a link is represented by "free cash flow" which is the cash in excess of capital expenditure needs. Starting from free cash flow it is possible to determine either: (i) changes in cash and cash equivalents for the period by adding/deducting cash flows relating to financing debts/receivables (issuance/repayment of debt and receivables related to financing activities), shareholders’ equity (dividends paid, net repurchase of own shares, capital issuance) and the effect of changes in consolidation and of exchange differences; (ii) changes in net borrowings for the period by adding/deducting cash flows relating to shareholders’ equity and the effect of changes in consolidation and of exchange differences.

(million euro)

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 Full Year 2005 Full Year 2006 Change

2,207 2,512 1,698 Net profit before minority interest 9,247 9,823 576
Adjustments
to reconcile to cash generated from operating income
before changes in working capital:
2,051 1,610 1,568 - amortisation and depreciation and other non
monetary items 6,518 5,753 (765 )
(30 ) 5 (4 ) - net
gains on disposal of assets (220 ) (59 ) 161
2,379 2,538 2,318 - dividends, interest, taxes and other changes 8,471 10,439 1,968
6,607 6,665 5,580 Cash
generated from operating income before changes in working
capital 24,016 25,956 1,940
(1,675 ) (1,181 ) (917 ) Changes in working capital related to operations (2,422 ) (1,094 ) 1,328
(2,860 ) (929 ) (2,863 ) Dividends
received, taxes paid, interest (paid) received (6,658 ) (7,859 ) (1,201 )
2,072 4,555 1,780 Net cash provided by operating activities 14,936 17,003 2,067
(2,464 ) (1,835 ) (2,944 ) Capital
expenditure (7,414 ) (7,833 ) (419 )
(66 ) (19 ) (19 ) Investments (127 ) (95 ) 32
40 23 201 Disposals 542 328 (214 )
255 (126 ) 407 Other cash flow related to capital expenditure,
investments and disposals 293 361 68
(163 ) 2.598 (575 ) Free
cash flow 8,230 9,764 1,534
(49 ) (3 ) (247 ) Borrowings (repayment) of debt related to
financing activities (109 ) 216 325
2,499 (378 ) 837 Changes in
short and long-term financial debt (540 ) (684 ) (144 )
(3,438 ) (253 ) (2,412 ) Dividends paid and changes in minority interests
and reserves (7,284 ) (6,443 ) 841
(42 ) 17 (77 ) Effect of
changes in consolidation and exchange differences 33 (201 ) (234 )
(1,193 ) 1,981 (2,474 ) NET CASH FLOW FOR THE PERIOD 330 2,652 2,322

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 Full Year 2005 Full Year 2006 Change

| (163 | ) | 2,598 | | (575 | ) | Change in net borrowings — Free
cash flow | 8,230 | | 9,764 | | 1,534 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (19 | ) | | | | | Net borrowings of acquired companies | (19 | ) | | | 19 | |
| | | | | | | Net
borrowings of divested companies | 21 | | 1 | | (20 | ) |
| (501 | ) | 199 | | 72 | | Exchange differences on net borrowings and other
changes | (980 | ) | 388 | | 1,368 | |
| (3,438 | ) | (253 | ) | (2,412 | ) | Dividends
paid and changes in minority interests and reserves | (7,284 | ) | (6,443 | ) | 841 | |
| (4,121 | ) | 2,544 | | (2,915 | ) | | (32 | ) | 3,710 | | 3,742 | |

(1) For a reconciliation of the summarised group cash flow statement to the statutory cash flow statement see Eni’s Report on the first half of 2006 "Reconciliation of summarized group balance sheet and cash flow statement to statutory schemes" pages 46 and 47.

  • 30 -

Table of Contents

Capital expenditure

Exploration & Production (million euro)

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

34 10 139 308.8 Acquisitions of proved and unproved property 301 152 (49.5 )
139 Italy 139
10 North Africa 10
8 West
Africa 60
26 Rest of world 241 3 (98.8 )
321 263 706 119.9 Exploration 656 1,348 105.5
18 33 38 111.1 Italy 38 128 ..
85 72 91 7.1 North
Africa 153 270 76.5
45 11 366 .. West Africa 75 471 ..
61 56 75 23.0 North Sea 126 174 38.1
112 91 136 21.4 Rest of world 264 305 15.5
1,137 862 1,056 (7.1 ) Development 3,952 3,629 (8.2 )
141 96 133 (5.7 ) Italy 411 403 (1.9 )
275 189 209 (24.0 ) North
Africa 1,007 701 (30.4 )
254 197 294 15.7 West Africa 889 864 (2.8 )
87 98 121 39.1 North Sea 385 406 5.5
380 282 299 (21.3 ) Rest of world 1,260 1,255 (0.4 )
25 17 36 44.0 Other 56 74 32.1
1,517 1,152 1,937 27.7 4,965 5,203 4.8

Gas & Power (million euro)

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

366 269 397 8.5 Italy 1,066 1,014 (4.9 )
45 42 56 24.4 Outside
Italy 86 160 86.0
411 311 453 10.2 1,152 1,174 1.9
19 28 22 15.8 Market 40 63 57.5
Italy 2 (100.0 )
19 28 22 15.8 Outside
Italy 38 63 65.8
80 37 54 (32.5 ) Distribution 182 158 (13.2 )
243 185 287 18.1 Transport 691 724 4.8
217 171 253 16.6 Italy 643 627 (2.5 )
26 14 34 30.8 Outside
Italy 48 97 102.1
69 61 90 30.4 Power generation 239 229 (4.2 )
411 311 453 10.2 1,152 1,174 1.9

Refining & Marketing (million euro)

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

283 118 241 (14.8 ) Italy 585 547 (6.5 )
34 19 31 (8.8 ) Outside
Italy 71 98 38.0
317 137 272 (14.2 ) 656 645 (1.7 )
154 95 139 (9.7 ) Refining
and Supply and Logistics 349 376 7.7
154 95 139 (9.7 ) Italy 349 376 7.7
114 42 90 (21.1 ) Marketing 225 223 (0.9 )
80 23 59 (26.3 ) Italy 154 125 (18.8 )
34 19 31 (8.8 ) Outside
Italy 71 98 38.0
49 0 43 (12.2 ) Other activities 82 46 (43.9 )
317 137 272 (14.2 ) 656 645 (1.7 )
  • 31 -

Table of Contents

Exploration & Production

Daily production of oil and natural gas by region

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

1,806 1,709 1,796 (0.6 ) Daily production of oil and natural gas (1) (kboe/d) 1,737 1,770 1.9
254 235 232 (8.7 ) Italy 261 238 (8.8 )
522 554 571 9.4 North Africa 480 555 15.6
372 365 372 .. West
Africa 343 372 8.5
291 254 291 .. North Sea 283 282 (0.4 )
367 301 330 (10.1 ) Rest of
world 370 323 (12.7 )
161.0 152.3 159.2 (1.1 ) Oil and natural gas production sold (1) (mmboe) 614.9 625.1 1.7

Daily production of liquids by region

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

1,132 1,041 1,079 (4.7 ) Production of liquids (1) (kbbl/d) 1,111 1,079 (2.9 )
85 77 80 (5.9 ) Italy 86 79 (8.1 )
315 330 334 6.0 North Africa 308 329 6.8
334 315 315 (5.7 ) West
Africa 310 322 3.9
176 164 181 2.8 North Sea 179 178 (0.6 )
222 155 169 (23.9 ) Rest of
world 228 171 (25.0 )

Daily production of natural gas by region

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

3,885 3,849 4,132 6.4 Production of natural gas (1) (mmcf/d) 3,602 3,955 9.8
953 918 883 (7.4 ) Italy 1,024 918 (10.3 )
1,201 1,271 1,377 14.7 North Africa 989 1,307 32.1
212 282 318 50.0 West
Africa 177 282 60.0
671 530 636 (5.3 ) North Sea 600 600 ..
848 848 918 8.3 Rest of
world 812 848 4.3

(1) Includes Eni’s share of production of entities accounted for with the equity method of accounting.

  • 32 -

Table of Contents

Proved reserves by region

December 31,

2005 2006

Italy (mmboe) 868 805
oil
(mmbbl) 228 215
natural gas (bcf) 3,676 3,390
North
Africa (mmboe) 2,047 2,037
oil (mmbbl) 979 998
natural
gas (bcf) 6,117 5,968
West Africa (mmboe) 1,285 1,129
oil
(mmbbl) 942 793
natural gas (bcf) 1,965 1,907
North
Sea (mmboe) 758 682
oil (mmbbl) 433 386
natural
gas (bcf) 1,864 1,695
Rest of world (mmboe) 1,879 1,783
oil
(mmbbl) 1,191 1,089
natural gas (bcf) 3,969 3,991
Total hydrocarbons (mmboe) 6,837 6,436
oil (mmbbl) 3,773 3,481
natural gas (bcf) 17,591 16,951
  • 33 -

Table of Contents

Gas & Power

Natural gas sales (millions of cubic meters)

Fourth Quarter 2005 Third Quarter 2006 Fourth Quarter 2006 % Ch. 4Q 06 vs 05 Full Year 2005 Full Year 2006 % Ch.

6,015 3,605 5,470 (9.1 ) Italy to third parties * 5,077 4,944 (2.6 )
1,535 522 1,386 (9.8 ) Wholesalers
(selling companies) 1,166 1,132 (2.9 )
215 119 215 Gas release 189 194 2.6
4,265 2,964 3,869 (9.3 ) End
customers 3,722 3,619 (2.8 )
1,432 1,052 1,344 (6.2 ) Industrial users 1,265 1,290 2.0
1,804 1,716 1,651 (8.5 ) Power
generation 1,703 1,613 (5.3 )
1,029 196 875 (14.9 ) Residential 755 716 (5.1 )
564 576 595 5.4 Own
consumption * 536 593 10.6
2,702 2,038 3,063 13.4 Rest of Europe * 2,268 2,687 18.5
84 104 46 (45.5 ) Outside
Europe 113 74 (35.0 )
9,366 6,323 9,174 (2.0 ) Sales and own consumption of subsidiaries 7,994 8,298 3.8
787 621 756 3.9 Sales
of affiliates (Eni’s share) 685 740 8.1
12 4 (66.7 ) Italy * 7 2 (71.4 )
741 514 702 (5.2 ) Rest of
Europe * 626 666 6.3
35 107 50 44.4 Outside Europe 52 73 38.9
10,153 6,944 9,930 (2.2 ) Total
natural gas sales and own consumption 8,679 9,038 4.1
10,564 7,259 10,406 (1.5 ) Sales of natural gas in Europe 9,076 9,435 4.0
10,034 6,733 9,834 (2.0 ) G&P in
Europe * 8,513 8,892 4.4
530 526 572 8.0 Upstream in Europe 563 544 (3.4 )

  • Market sectors denoted with an asterisk are included within "G&P in Europe".

  • 34 -

Table of Contents

Information on bonds

Bonds maturing in the 18-month period starting on December 31, 2006

| (million
euro) | |
| --- | --- |
| Issuing
company | Amount at December 31, 2006 (1) |
| Eni Coordination Center SA | 634 |
| Eni USA
Inc | 153 |
| | 787 |

(1) Amounts in euro at December 31, 2006 include instalments with interest accrued.

Bonds issued in the 2006 (guaranteed by Eni SpA)

Issuing company Nominal amount (million) Currency Currency amount at Dec. 31, 2006 (million euro) (1) Maturity Rate %

Eni Coordination Center SA 5,000 JPY 32 2014 fixed 1.560
Eni
Coordination Center SA 45 USD 34 2013 variable
Eni Coordination Center SA 100 GBP 153 2011 fixed 5.120
219

(1) Amounts in euro at December 31, 2006 include instalments with interest accrued.

  • 35 -

Table of Contents

Accounts of the parent company

Profit and loss account

(million euro) 2005 2006 Change % Ch.

| Revenues — Net sales
from operations | 44,794 | | 52,987 | | 8,193 | | 18.3 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Other income and revenues | 231 | | 186 | | (45 | ) | (19.5 | ) |
| Total
revenues | 45,025 | | 53,173 | | 8,148 | | 18.1 | |
| Operating expenses | | | | | | | | |
| Purchases,
services and other | (39,537 | ) | (48,248 | ) | (8,711 | ) | 22.0 | |
| of which non recurring items | (290 | ) | (150 | ) | 140 | | (48.3 | ) |
| Payroll
and related costs | (780 | ) | (932 | ) | (152 | ) | 19.5 | |
| Depreciation, amortisation and impairments | (872 | ) | (829 | ) | 43 | | (4.9 | ) |
| Operating
profit | 3,836 | | 3,164 | | (672 | ) | (17.5 | ) |
| Financial income (expense) | (29 | ) | 35 | | 64 | | (220.7 | ) |
| Income
from investments | 3,606 | | 3,785 | | 179 | | 5.0 | |
| Profit before income taxes | 7,413 | | 6,984 | | (429 | ) | (5.8 | ) |
| Income
taxes | (1,371 | ) | (1,163 | ) | 208 | | (15.2 | ) |
| Net profit | 6,042 | | 5,821 | | (221 | ) | (3.7 | ) |
| Exclusion
of inventory holding (gains) losses | (672 | ) | 118 | | 790 | | (117.6 | ) |
| Replacement cost net profit | 5,370 | | 5,939 | | 569 | | 10.6 | |

Condensed balance sheet

(million euro) 12.31.2005 12.31.2006 Change

| Fixed assets — Property,
plant and equipment, net | 4,954 | | 5,507 | | 553 | |
| --- | --- | --- | --- | --- | --- | --- |
| Inventories - compulsory stock | 1,766 | | 1,701 | | (65 | ) |
| Intangible
assets, net | 858 | | 948 | | 90 | |
| Investments, net | 20,805 | | 21,086 | | 281 | |
| Accounts
receivable financing and securities related to operations | 29 | | 28 | | (1 | ) |
| Net accounts payable in relation to capital
expenditure | (445 | ) | (313 | ) | 132 | |
| | 27,967 | | 28,957 | | 990 | |
| Net working capital | 95 | | (23 | ) | (118 | ) |
| Employee
termination indemnities and other benefits | (255 | ) | (308 | ) | (53 | ) |
| Capital employed, net | 27,807 | | 28,626 | | 819 | |
| Shareholders’
equity | 26,872 | | 26,935 | | 63 | |
| Net borrowings | 935 | | 1,691 | | 756 | |
| Total
liabilities and shareholders’ equity | 27,807 | | 28,626 | | 819 | |

  • 36 -

Table of Contents

PRESS RELEASE

Eni 2007-2010 Strategic Plan and Targets

Principal targets:

  • Growth in hydrocarbon production: 3% organic CAGR to 2010
  • Reserve replacement ratio: >100% in the 2007-2010 period
  • Strengthen leadership in the European gas market: target over 105 bcm gas sales in 2010
  • Free cash flow generation in the G&P Division: target 2.1 billion euro in 2010

San Donato Milanese, February 23 rd , 2007 - Paolo Scaroni, CEO of Eni, today presented the company's 2007-2010 strategic plan to the financial community. The new industrial plan is focused on growth across all Divisions. Over the 2007-2010 period Eni will continue to create value for its shareholders through the implementation of a disciplined investment programme, focused on increasing growth and efficiency throughout the business.

Exploration and Production

Eni's strategy in E&P confirms the company’s objective to deliver industry leading production growth, targeting hydrocarbon production in excess of 2 million barrels of oil equivalent per day by 2010, representing a 3% average annual increase. Moreover, we expect growth to remain strong beyond the plan period, and aim to reach an average annual production growth of 3% to 2013.

Increases in production will be achieved through organic growth in core areas such as North and West Africa and the Caspian region, which are among the fastest-growing producing regions in the world. Eni will build on its unique position in such areas and on its exposure to world-leading projects.

The large Kashagan project has revealed potential above initial expectations. Plateau production is now forecast to exceed 1.5 million barrels of oil equivalent per day, with first oil from 2010.

Gas and Power

Eni confirms its objective to strengthen its leading position in the European Gas Market. Eni aims to reach a cash flow generation of up to 2.1 billion euro by 2010, representing an average annual growth of 3%. This will be achieved by leveraging on the company’s unrivalled supply portfolio and its unique European infrastructure network.

Eni will increase its total gas sales by an average of 10% a year over the period to over 105 billion cubic meters by 2010, including 50 billion cubic meters of gas sold in the Italian market.

Table of Contents

In Italy, the commercial strategy will focus on the launch of the dual offer of power and gas, leveraging on our large costumer base and our power generation assets.

Refining and Marketing

Eni’s strategy in the R&M Division will be to maximize returns from the existing assets, targeting an EBIT increase of 40% by 2010 based on the 2006 scenario, through focused investments and the implementation of an efficiency programme across the businesses.

In particular, in refining, Eni will continue to upgrade its assets in order to increase both throughput and conversion index to best-in-class European standards.

In marketing, Eni aims to increase sales through the improvement of service levels and by broadening its non-oil offering.

Cash allocation

In order to implement its growth strategy Eni plans to invest 44.6 billion euro in 2007-2010. This represents a 20% increase on the previous plan. At the same time Eni has launched the first round of an efficiency programme which will enable the company to reduce costs by approximately 1 billion euro by 2010 through process streamlining and procurement optimisation.

In the 2007-2010 period Eni will continue to create value for its shareholders and undertake a sustainable dividend plan targeting a top dividend yield performance.

Company contacts:

Press Office +39 02 52031875 - +39 06 5982398

Switchboard: +39 0659821

[email protected] [email protected] [email protected]

Website: www.eni.it

Table of Contents

Eni preliminary results for 2006

February 23, 2007

Table of Contents

Index

3 Statistic recap
4 Basis of presentation
Financial Results 5 Profit and loss account
8 Analysis of profit and loss account items
14 Consolidated balance sheet
18 Reclassified cash flow statement and change in
net borrowings
23 Outlook
Financial and Operating review by business
segment 24 Exploration & Production
29 Gas & Power
32 Refining & Marketing
35 Petrochemicals
37 Engineering and Construction
Non-GAAP measures 39 Reconciliation of reported operating profit by
division and net profit to adjusted operating and net
profit
46 Accounts of the parent company Eni SpA

ENI PRELIMINARY RESULTS FOR 2006 – 2 –

Table of Contents

Index

Summary financial data (million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

21,506 21,416 (90 ) (0.4 ) Net sales from operations 73,728 86,105 12,377 16.8
4,396 3,957 (439 ) (10.0 ) Operating
profit 16,827 19,327 2,500 14.9
4,931 4,776 (155 ) (3.1 ) Adjusted operating profit (1) 17,558 20,490 2,932 16.7
2,105 1,520 (585 ) (27.8 ) Net profit
pertaining to Eni 8,788 9,217 429 4.9
0.56 0.41 (0.15 ) (26.6 ) - per ordinary share (euro) (2) 2.34 2.49 0.15 6.6
1.34 1.06 (0.28 ) (20.4 ) - per ADS
($) (2) (3) 5.81 6.26 0.45 7.7
2,396 2,355 (41 ) (1.7 ) Adjusted net profit pertaining to Eni (1) 9,251 10,412 1,161 12.5
2,072 1,780 (292 ) (14.1 ) Net cash
provided by operating activities 14,936 17,003 2,067 13.8
2,464 2,944 480 19.5 Capital expenditure 7,414 7,833 419 5.7

| (1) | For a
detailed of adjusted operating profit and net profit see
page 39. |
| --- | --- |
| (2) | Fully diluted. Dollar
amounts are converted on the basis of the average EUR/USD
exchange rate quoted by the ECB for the periods
presented. |
| (3) | One American Depository
Share is equal to two Eni ordinary shares. |

Key market indicators

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

56.90 59.68 2.78 4.9 Average price of Brent dated crude oil (1) 54.38 65.14 10.76 19.8
1.189 1.290 0.101 8.5 Average
EUR/USD exchange rate (2) 1.244 1.256 0.012 1.0
47.86 46.26 (1.60 ) (3.3 ) Average price in euro of Brent dated crude oil 43.71 51.86 8.15 18.6
5.05 2.18 (2.87 ) (56.8 ) Average
European refining margin (3) 5.78 3.79 (1.99 ) (34.4 )
4.25 1.69 (2.56 ) (60.2 ) Average European refining margin in euro 4.65 3.02 (1.63 ) (35.1 )
2.3 3.6 1.3 56.5 Euribor -
three-month rate (%) 2.2 3.1 0.9 40.9
4.3 5.3 1.0 23.3 Libor - three-month dollar rate (%) 3.5 5.2 1.7 48.6

| (1) | In US dollars
per barrel. Source: Platt’s Oilgram. |
| --- | --- |
| (2) | Source: ECB. |
| (3) | In US dollars
per barrel FOB Mediterranean Brent dated crude oil.
Source: Eni calculations based on Platt’s Oilgram
data. |

Summary operating data

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 1,132 | 1,079 | (53 | ) | (4.7 | ) | Daily production: — total
liquids (kbbl/d) | 1,111 | 1,079 | (32 | ) | (2.9 | ) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 3,885 | 4,132 | 247 | | 6.4 | | natural gas (1) (mmcf/d) | 3,602 | 3,955 | 353 | | 9.8 | |
| 1 ,806 | 1,796 | (10 | ) | (0.6 | ) | hydrocarbons (1) (kboe/d) | 1,737 | 1,770 | 33 | | 1.9 | |
| 10,564 | 10,406 | (158 | ) | (1.5 | ) | Natural gas sales in Europe (mmcf/d) | 9,076 | 9,435 | 359 | | 4.0 | |
| 530 | 572 | 42 | | 8.0 | | - of
which upstream sales (mmcf/d) | 563 | 544 | (19 | ) | (3.4 | ) |
| 6.07 | 6.07 | | | | | Electricity production sold (TWh) | 22.77 | 24.82 | 2.05 | | 9.0 | |
| 247 | 248 | 1 | | 0.6 | | Retail
sales of refined products in Europe Agip brand (kbbl/d) | 248 | 249 | 1 | | 0.5 | |
| 1,289 | 1,323 | 34 | | 2.6 | | Sales of petrochemicals products (ktonnes) | 5,376 | 5,264 | (112 | ) | (2.1 | ) |

(1) Includes own consumption of natural gas (50,000 and 48,000 boe/day in the fourth quarter of 2006 and 2005, respectively; 50,000 and 44,000 boe/day in year 2006 and 2005, respectively).

ENI PRELIMINARY RESULTS FOR 2006 – 3 –

Table of Contents

Index

Basis of presentation

Eni's preliminary results for 2006, unaudited, have been prepared in accordance with the evaluation and measurement criteria contained in the International Financial Reporting Standards (IFRS) issued by the International Accounting Standard Board (IASB) and adopted by the European Commission according to the procedure set forth in Article 6 of the European Regulation (CE) No. 1606/2002 of the European Parliament and European Council of July 19, 2002.

Financial information relating to profit and loss account data are presented as of December 31, 2006 and the fourth quarter of 2006 and as of December 31, 2005 and the fourth quarter of 2005. Financial information relating to balance sheet data are presented on December 31, 2006 and December 31, 2005. Tables are comparable with those of 2005 financial statements and the first half report.

Disclaimer This report contains certain forward-looking statements particularly those regarding capital expenditure, development and management of oil and gas resources, dividends, share repurchases, allocation of future cash flow from operations, future operating performance, gearing, targets of production and sale growth, new markets, and the progress and timing of projects. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors, including the timing of bringing new fields on stream; management's ability in carrying out industrial plans and in succeeding in commercial transactions; future levels of industry product supply; demand and pricing; operational problems; general economic conditions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; development and use of new technology; changes in public expectations and other changes in business conditions; the actions of competitors; and other factors discussed elsewhere in this document.

Due to the seasonality in demand for natural gas and certain refined products and the changes in a number of external factors affecting Eni's operations, such as prices and margins of hydrocarbons and refined products, Eni's results from operations and changes in average net borrowings for the fourth quarter cannot be extrapolated for the full year.

ENI PRELIMINARY RESULTS FOR 2006 – 4 –

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Index

Financial Results

Profit and loss account

(million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

21,506 21,416 (90 ) (0.4 ) Net sales from operations 73,728 86,105 12,377 16.8
318 288 (30 ) (9.4 ) Other
income and revenues 798 769 (29 ) (3.6 )
(15,684 ) (15,860 ) (176 ) 1.1 Operating expenses (51,918 ) (61,126 ) (9,208 ) 17.7
(290 ) (182 ) 108 of
which non recurring items (290 ) (206 ) 84
(1,744 ) (1,887 ) (143 ) 8.2 Depreciation, amortization and writedowns (5,781 ) (6,421 ) (640 ) 11.1
4,396 3,957 (439 ) (10.0 ) Operating
profit 16,827 19,327 2,500 14.9
(98 ) 52 150 .. Net financial income (expense) (366 ) 161 527 ..
146 157 11 7.5 Net income
from investments 914 903 (11 ) (1.2 )
4,444 4,166 (278 ) (6.3 ) Profit before income taxes 17,375 20,391 3,016 17.4
(2,237 ) (2,468 ) (231 ) 10.3 Income
taxes (8,128 ) (10,568 ) (2,440 ) 30.0
50.3 59.2 8.9 Tax rate (%) 46.8 51.8 5.0
2,207 1,698 (509 ) (23.1 ) Net
profit 9,247 9,823 576 6.2
2,105 1,520 (585 ) (27.8 ) of which: Net profit pertaining to Eni 8,788 9,217 429 4.9
102 178 76 74.5 Net profit
of minorities 459 606 147 32.0
2,105 1,520 (585 ) (27.8 ) Net profit pertaining to Eni 8,788 9,217 429 4.9
(131 ) 213 344 Exclusion
of inventory holding (gains) losses (759 ) 33 792
422 622 200 Exclusion of special items: 1,222 1,162 (60 )
290 199 (91 ) - non
recurring items 290 218 (72 )
132 423 291 - other special items 932 944 12
2,396 2,355 (41 ) (1.7 ) Adjusted
net profit pertaining to Eni 9,251 10,412 1,161 12.5

Break-down of adjusted net profit by business segment:

(million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 1,572 | | 1,304 | | (268 | ) | (17.0 | ) | Adjusted net profit by division — Exploration
& Production | 6,186 | | 7,279 | | 1,093 | | 17.7 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 640 | | 873 | | 233 | | 36.4 | | Gas & Power | 2,552 | | 2,862 | | 310 | | 12.1 | |
| 221 | | 115 | | (106 | ) | (48.0 | ) | Refining
& Marketing | 945 | | 629 | | (316 | ) | (33.4 | ) |
| 64 | | 141 | | 77 | | 120.3 | | Petrochemicals | 227 | | 174 | | (53 | ) | (23.3 | ) |
| 118 | | 131 | | 13 | | 11.0 | | Engineering
and Construction | 328 | | 400 | | 72 | | 22.0 | |
| (90 | ) | (85 | ) | 5 | | (5.6 | ) | Other activities | (297 | ) | (301 | ) | (4 | ) | 1.3 | |
| (46 | ) | 57 | | 103 | | .. | | Corporate
and financial companies | (142 | ) | 54 | | 196 | | .. | |
| 19 | | (3 | ) | (22 | ) | .. | | Unrealized profit in inventory | (89 | ) | (79 | ) | 10 | | (11.2 | ) |
| 2,498 | | 2,533 | | 35 | | 1.4 | | | 9,710 | | 11,018 | | 1,308 | | 13.5 | |
| | | | | | | | | of which: | | | | | | | | |
| 102 | | 178 | | 76 | | 74.5 | | Net profit
of minorities | 459 | | 606 | | 147 | | 32.0 | |
| 2,396 | | 2,355 | | (41 | ) | (1.7 | ) | Adjusted net profit pertaining to Eni | 9,251 | | 10,412 | | 1,161 | | 12.5 | |

ENI PRELIMINARY RESULTS FOR 2006 – 5 –

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Fourth Quarter

Group Result

Eni's net profit for the fourth quarter of 2006 was euro 1,520 million, down euro 585 million from the fourth quarter of 2005, or 27.8%, due essentially to: (i) a lower operating performance (down euro 439 million, or 10%), due to the adverse impact of the appreciation of the euro over the dollar (8.5%), higher exploration expense and weaker refining activity, partly offset by the improved operating performance of the Gas & Power and Petrochemicals divisions; (ii) a higher Group tax rate, from 50.3% to 59.2%, primarily due to the Algerian Government's introduction of a windfall tax on upstream earnings, effective as from August 1, 2006. This included higher current taxation and a deferred tax charge (for a total of euro 328 million, of which euro 149 million pertaining to taxation for the period).

Eni’s adjusted net profit at euro 2,355 million was slightly lower from the fourth quarter of 2005 (down 1.7%). Adjusted net profit is calculated by excluding an inventory holding loss of euro 213 million and special charges of euro 622 million (both amounts net of the related tax effect).

Special charges for the quarter were principally related to a deferred tax charge, reflecting the windfall tax levied by the Algerian Government as discussed above, asset impairments, consisting mainly of impairments of assets in the Exploration & Production and the Petrochemicals divisions, and risk provisions with respect to fines imposed by certain regulatory and antitrust Authorities, environmental provisions and redundancy incentives.

Divisional performance

The decline in the Group adjusted net profit for the fourth quarter was attributable to a reduction in profits reported in the:

| • | Exploration &
Production division (down euro 268 million, or 17%),
due to a lower operating performance (down euro 386
million) impacted by currency translation effects and
increased exploration expenses. These expenses were
partially offset by higher realizations in dollars (oil
up 5%; natural gas up 11.2%); |
| --- | --- |
| • | Refining & Marketing
division (down euro 106 million, or 48%), due to a
lower operating performance (down euro 231 million)
adversely impacted by the weaker refining environment
(Brent margins were down 2.87 $/bbl, or 56.8% from one
year ago) and the appreciation of the euro over the
dollar, partly offset by the benefit derived from the
higher profitability of processed crudes. Other negatives
during the quarter included a deterioration of operating
results of marketing activities in Italy due to the
adverse impact of mild weather conditions on sales of
refined products for heating uses. |

These declines were partly offset by better adjusted net profit reported in the:

| • | Gas & Power division (up
euro 233 million, or 36.4%), primarily reflecting the
benefit from the partial reversal of a provision accrued
in 2005 financial statements as an estimate of the impact
of regulation enacted by the Authority for Electricity
and Gas with Resolution No. 248/2004. Operating
performance improved from one year ago as a result of
higher natural gas selling margins, supported by a
favorable trading environment. Volumes of natural gas
sold by consolidated subsidiaries (down 192 mmcf/d, or
2%) and volumes distributed through low pressure
pipelines to the Italian retail market were both down
from a year ago due to mild weather conditions.
Increasing adjusted net profit for the sector was also a
result of the stronger performance of certain
equity-accounted entities; |
| --- | --- |
| • | Petrochemicals division (up
euro 77 million, or 120.3%), reflecting an improved
operating performance (up euro 80 million) resulting from
a recovery in margins. |

ENI PRELIMINARY RESULTS FOR 2006 – 6 –

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Full Year

Group Results

Eni's net profit for 2006 was a record euro 9,217 million, up euro 429 million compared to 2005, or 4.9%. This increase reflected a better operating performance (up euro 2,500 million), partially offset by a higher Group tax rate, which rose from 46.8% to 51.8%. The increase in the Group tax rate was recorded mainly in the Exploration & Production division due to: (i) the Algerian windfall tax on upstream earnings (euro 328 million, of which euro 149 million pertaining to taxation for the period); (ii) an increase in the supplemental tax rate implemented by the British Government, applicable to profit before taxes earned by operations in the North Sea, effective as from the start of 2006 affecting both current taxation and deferred tax liabilities (euro 198 million of which euro 107 million, pertaining to taxation for the period).

Eni's adjusted net profit for the year was up 12.5% to euro 10,412 million. Adjusted net profit is calculated by excluding an inventory holding loss of euro 33 million and special charges of euro 1,162 million (both amounts are net of the related fiscal effect).

Special charges for the year were principally related to asset impairments, impacting mainly assets in the Exploration & Production division, environmental provisions, redundancy incentives risk provisions with respect to certain fines imposed by certain regulatory and antitrust Authorities, and a deferred tax charge, reflecting the windfall tax levied by the Algerian Government and the supplemental tax rate in the UK, as mentioned above.

Return on average capital employed (ROACE) calculated on an adjusted basis for the twelve-month period ending December 31, 2006 was 22.7% (20.5% in 2005). Eni's results benefited from a favorable trading environment, with a higher Brent crude oil price (up 19.8% compared to 2005) and higher selling margins on petrochemical products. These positives were partially offset by declining refining margins (margin on Brent were down 34.4%) Selling margins on natural gas were underpinned by a favorable trading environment. The euro appreciated by 1% over the dollar.

Divisional performance

The Group adjusted net profit for the year was supported by the increase reported in the:

| • | Exploration &
Production division (up euro 1,093 million, or
17.7%), reflecting a better operating performance (up
euro 2,860 million) as a result of higher realizations in
dollars (oil up 22.4% and natural gas up 17.8%) combined
with increased production volumes sold (up 10.2 mmboe).
These positives were offset in part by higher operating
costs and amortization charges, and increased exploration
expenses. Adjusted net profit for the year was also
negatively affected by the effects of exchange rates and
a higher tax rate (from 51.8% to 53.9%); |
| --- | --- |
| • | Gas & Power division (up
euro 310 million, or 12.1%), reflecting a better
operating performance (up euro 351 million) resulting
from higher natural gas selling margins due to a
favorable trading environment and the reduced impact of
the tariff regime implemented by the Authority for
Electricity and Gas with Resolution No. 248/2004. Growth
in natural gas sales by consolidated subsidiaries (up 304
mmcf/d, or 3.8%) and in volumes transported outside Italy
contributed positively. On a negative note,
transportation activities in Italy posted lower operating
results due to the tariff regime enacted by the Authority
for Electricity and Gas with Resolution No. 166/2005 and
distribution activities suffered from lower volumes.
Adjusted net profit for the year was supported by a
better performance of certain equity-accounted entities; |
| • | Engineering and Construction division (up euro 72 million, or 22%), reflecting a better
operating performance against the backdrop of favorable
trends in the demand for oilfield services. |

These increases were partly offset by lower adjusted net profit reported in the Refining & Marketing division (down euro 316 million, or 33.4%), due to a poor operating performance (down euro 424 million) dragged down by a weak refining environment, the appreciation of the euro over the dollar and the impact of higher level of planned maintenance activity at refineries. Divisional results were also adversely impacted by the weaker performance of marketing activities in Italy due to lower sales as a consequence of the mild weather conditions of the fourth quarter.

ENI PRELIMINARY RESULTS FOR 2006 – 7 –

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Analysis of profit and loss account items

Net sales from operations

(million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

6,419 6,152 (267 ) (4.2 ) Exploration & Production 22,531 27,173 4,642 20.6
7,419 8,170 751 10.1 Gas &
Power 22,969 28,368 5,399 23.5
9,555 8,579 (976 ) (10.2 ) Refining & Marketing 33,732 38,210 4,478 13.3
1,657 1.740 83 5.0 Petrochemicals 6,255 6,823 568 9.1
1,809 1,969 160 8.8 Engineering and Construction 5,733 6,979 1,246 21.7
222 161 (61 ) (27.5 ) Other
activities 863 823 (40 ) (4.6 )
272 345 73 26.8 Corporate and financial companies 1,239 1,174 (65 ) (5.2 )
(5,847 ) (5,700 ) 147 Consolidation
adjustment (19,594 ) (23,445 ) (3,851 )
21,506 21,416 (90 ) (0.4 ) 73,728 86,105 12,377 16.8

Fourth Quarter

Eni's net sales from operations for the fourth quarter of 2006 were euro 21,416 million, down euro 90 million from the fourth quarter of 2005, or 0.4%, reflecting primarily the negative impact of the 8.5% appreciation of the euro versus the dollar and lower sales of natural gas (down 2%) and refined products (down 3.5%) due to mild weather conditions, offset in part by higher product prices in all of Eni's main operating segments.

Full Year

Eni's net sales from operations (revenues) for 2006 were euro 86,105 million, up euro 12,377 million from 2005, or 16.8%, primarily reflecting higher product prices in all of Eni's main operating segments, higher volumes sold of hydrocarbons and natural gas and higher activity levels in the Engineering and Construction segment, offset in part by the negative impact of the appreciation of the euro versus the dollar (up 1%).

Revenues generated by the Exploration & Production segment were euro 27,173 million, up euro 4,642 million, or 20.6%, primarily reflecting higher realizations in dollars (oil up 22.4%, natural gas up 17.8%) and higher oil and gas production sold (up 10.2 mmboe). These positives were partially offset by the appreciation of the euro over the dollar (up 1%).

Revenues generated by the Gas & Power segment were euro 28,368 million, up euro 5,399 million, or 23.5%, primarily reflecting increased natural gas prices related in particular to a favorable trading environment, higher natural gas volumes sold by consolidated subsidiaries (up 3.14 bcm, or 3.8%) and higher electricity production sold (up 2.05 TWh, or 9%).

Revenues generated by the Refining & Marketing segment were euro 38,210 million, up euro 4,478 million, or 13.3%, primarily reflecting higher international prices for oil and refined products.

Revenues generated by the Petrochemical segment were euro 6,823 million, up euro 568 million, or 9.1%, primarily reflecting an increase in average selling prices.

Revenues generated by the Engineering and Construction segment were euro 6,979 million, up euro 1,246 million, or 21.7%, primarily reflecting higher activity levels in the offshore and onshore construction businesses and a higher utilization rate of vessels and higher tariffs in the offshore drilling area.

ENI PRELIMINARY RESULTS FOR 2006 – 8 –

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Operating expenses

(million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

14,838 14,884 46 Purchases, services and other 48,567 57,477 8,910
290 182 (108 ) of
which: - non recurring items 290 206 (84 )
400 117 (283 ) - other special items 1,300 423 (877 )
846 976 130 15.4 Payroll
and related costs 3,351 3,649 298 8.9
44 101 57 of which: - provision for redundancy incentives 79 178 99
15,684 15,877 193 1.2 51,918 61,143 9,225 17.8

Operating expenses for 2006 (euro 61,143 million) were up euro 9,225 million from 2005, or 17.8%, reflecting primarily: (i) higher prices for oil-based and petrochemical feedstocks and for natural gas, affected also by higher charges related to the climatic emergency of the first quarter of 2006; (ii) higher operating costs in the Exploration & Production segment, in particular the increase in operating costs resulted from the higher share of development projects in hostile environments and reflected sector-specific inflation; (iii) higher costs for refinery maintenance. These negative factors were offset in part by the impact of the appreciation of the euro over the dollar.

Operating expenses include non-recurring charges of euro 206 million in 2006 related essentially to a provision related to fines imposed by certain antitrust and regulatory authorities; in 2005 non-recurring charges of euro 290 million concerned a provision related to a fine levied by the Italian Antitrust Authority. Other special charges included in operating costs in 2006 (euro 423 million) related to environmental provisions (euro 292 million), in particular in the Refining & Marketing segment and Syndial; in 2005 other special items of euro 1,300 million concerned essentially environmental provisions (euro 835 million) recorded in particular in the Refining & Marketing segment and Syndial, and provisions to the risk reserve (euro 379 million) related in particular to insurance charges deriving from the extra premium due for 2005 and for the next five years (assuming normal accident rates) related to the participation of Eni to Oil Insurance Ltd. These higher charges took account of the exceptionally high rate of accidents which occurred in the 2004-2005 two year period.

Labor costs (euro 3,649 million) were up euro 298 million, or 8.9%, reflecting primarily higher redundancy incentives, an increase in unit labor cost in Italy and higher average workforce outside Italy, partly offset by a reduction in average workforce in Italy.

ENI PRELIMINARY RESULTS FOR 2006 – 9 –

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Employees

(units)

December 31,

2005 2006 Change % Ch.

Exploration & Production 8,030 8,336 306 3.8
Gas &
Power 12,324 12,074 (250 ) (2.0 )
Refining & Marketing 8,894 9,437 543 6.1
Petrochemicals 6,462 6,025 (437 ) (6.8 )
Engineering and Construction 28,684 30,902 2,218 7.7
Other
activities 2,636 2,219 (417 ) (15.8 )
Corporate and financial companies 5,228 4,579 (649 ) (12.4 )
72,258 73,572 1,314 1.8

As of December 31, 2006, the total number of employees were 73,572, with an increase of 1,314 employees from December 31, 2005 (up 1.8%). Employees in Italy totalled 39,765. The decline of 427 employees was related mainly to the balance of hiring and dismissals (391 employees) and the decrease related to changes in consolidation (a total of 41 employees) resulting from: (i) the conferral of Fiorentina Gas to the newly incorporated Eni's affiliate Toscana Gas (Eni's interest 48.7%); (ii) the sale of water treatment activities in Ferrara; (iii) the purchase of Siciliana Gas and Siciliana Gas Vendite SpA. In 2006, a total of 2,208 employees were hired, of these 1,486 with open-ended contracts, and 2,599 employees were dismissed (of these 1,960 employees with open-ended contracts).

Employees outside of Italy totalled 33,807, with a 1,741 employee increase related in particular to the hiring of fixed-term employees by Saipem, in particular in Kazakhstan.

Depreciation, amortization and writedowns

(million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 1,325 — 169 | | 1,418 — 185 | | 93 — 16 | | 7.0 — 9.5 | | Exploration & Production — Gas &
Power | 3,945 — 684 | | 4,646 — 687 | | 701 — 3 | | 17.8 — 0.4 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 123 | | 101 | | (22 | ) | (17.9 | ) | Refining & Marketing | 462 | | 434 | | (28 | ) | (6.1 | ) |
| 30 | | 33 | | 3 | | 10.0 | | Petrochemicals | 118 | | 124 | | 6 | | 5.1 | |
| 44 | | 56 | | 12 | | 27.3 | | Engineering and Construction | 176 | | 195 | | 19 | | 10.8 | |
| 4 | | 2 | | (2 | ) | (50.0 | ) | Other
activities | 16 | | 6 | | (10 | ) | (62.5 | ) |
| 43 | | 21 | | (22 | ) | (51.2 | ) | Corporate and financial companies | 112 | | 70 | | (42 | ) | (37.5 | ) |
| (4 | ) | (7 | ) | (3 | ) | .. | | Unrealized
profit in inventory | (4 | ) | (9 | ) | (5 | ) | .. | |
| 1,734 | | 1,809 | | 75 | | 4.3 | | Total amortizations | 5,509 | | 6,153 | | 644 | | 11.7 | |
| 10 | | 78 | | 68 | | .. | | Impairments | 272 | | 268 | | (4 | ) | (1.5 | ) |
| 1,744 | | 1,887 | | 143 | | 8.2 | | | 5,781 | | 6,421 | | 640 | | 11.1 | |

In 2006 depreciation and amortization charges (euro 6,153 million) were up euro 644 million, or 11.7%, from 2005 mainly in the Exploration & Production segment (euro 701 million) reflecting primarily higher exploration expenditure and increased development costs incurred for developing new fields and maintaining production levels in mature fields combined with the effects of higher production.

Impairments (euro 268 million) concerned essentially mineral assets in the Exploration & Production segment, intangible assets in the Gas & Power segment and tangible assets in the Petrochemical segment.

ENI PRELIMINARY RESULTS FOR 2006 – 10 –

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Operating profit

(million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

4,396 3,957 (439 ) (10.0 ) Operating profit 16,827 19,327 2,500 14.9
(209 ) 341 550 Exclusion
on inventory holding (gains) losses (1,210 ) 88 1,298
744 478 (266 ) Exclusion special items: 1,941 1,075 (866 )
of
which:
290 182 (108 ) - non recurring items 290 206 (84 )
454 296 (158 ) - other
special items 1,651 869 (782 )
4,931 4,776 (155 ) (3.1 ) Adjusted operating profit 17,558 20,490 2,932 16.7
Break-down
by division:
3,581 3,195 (386 ) (10.8 ) Exploration & Production 12,903 15,763 2,860 22.2
890 1,269 379 42.6 Gas &
Power 3,531 3,882 351 9.9
379 148 (231 ) (60.9 ) Refining & Marketing 1,214 790 (424 ) (34.9 )
74 154 80 108.1 Petrochemicals 261 219 (42 ) (16.1 )
142 152 10 7.0 Engineering and Construction 314 508 194 61.8
(92 ) (77 ) 15 16.3 Other
activities (296 ) (299 ) (3 ) (1.0 )
(74 ) (53 ) 21 28.4 Corporate and financial companies (228 ) (240 ) (12 ) (5.3 )
31 (12 ) (43 ) Unrealized
profit in inventory (1) (141 ) (133 ) 8
4,931 4,776 (155 ) (3.1 ) 17,558 20,490 2,932 16.7

(1) Unrealized profit in inventory concerned intra-group sales of goods and services recorded at in the equity of the purchasing business segment.

Fourth Quarter

Adjusted operating profit, excluding an inventory holding loss of euro 341 million and special charges of euro 478 million, amounted to euro 4,776 million, a decline of euro 155 million from 2005 (down 3.1%), related in particular to the declines recorded in the following segments: (i) Exploration & Production (down euro 386 million) reflecting the negative impact of exchange rates and higher exploration expenditure, offset in part by higher realized prices for oil and gas; (ii) Refining & Marketing (down euro 231 million, or 60.9%) affected in particular by a negative refining trading environment. These declines were offset in part by a positive performance of the following segments: (i) Gas & Power (up euro 379 million) reflecting the benefit from the partial reversal of a provision accrued in 2005 financial statements as an estimate of the impact of regulation implemented by the Authority for Electricity and Gas with resolution No. 248/2004, and higher natural gas selling margins, offset in part by a decline in volumes sold by subsidiaries and volumes distributed due to mild weather conditions; (ii) Petrochemicals (up euro 80 million) related to higher selling margins.

Full Year

Adjusted operating profit, excluding an inventory holding loss of euro 88 million and special charges of euro 1,075 million, amounted to euro 20,490 million, an increase of euro 2,932 million from 2005 (up 14.9%), related in particular to: (i) the Exploration & Production segment (up euro 2,860 million, or 22.2%), reflecting higher realizations and higher production sold (up 10.2 mmboe, or 1.7%); (ii) the Gas & Power segment (up euro 351 million, or 9.9%) due to higher natural gas selling margins, a softer impact of resolution No. 248/2004 of the Authority for Electricity and Gas and higher sales of consolidated companies (up 304 mmcf/d, or 3.8%); (iii) the Engineering and Construction segment (up euro 194 million, or 61.8%) due to a positive performance against the backdrop of favorable oil services markets. These increases were offset in part by the decline of the Refining & Marketing segment (down euro 424 million, or 34.9%) due to a negative refining trading environment and the impact of longer standstills of refineries due to planned maintenance.

ENI PRELIMINARY RESULTS FOR 2006 – 11 –

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Net financial income

2006 net financial income (euro 161 million) was up euro 527 million from 2005 when net financial charges of euro 366 million were recorded. The increase reflected: (i) the positive change in the fair value evaluation of financial derivative instruments recorded in the profit and loss account instead of being recognized in connection with related assets, liabilities and commitments because Eni's financial derivative instruments do not meet the criteria to be assessed as hedging instruments under IFRS; (ii) higher interest income deriving from a higher average availability of cash and cash equivalents offset in part by the impact of higher interest rates on dollar loans (Libor up 1.7 percentage points) and on euro loans (Euribor up 0.9 percentage points).

Net income from investments
(million
euro)

| Effect of the application of the equity method
of accounting — Dividends | 37 — 68 | | 509 — 3 | | 194 — 26 | | 806 — 98 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Net gains from disposal | (6 | ) | 21 | | | | 17 | |
| Other net
income (loss) from investments | (14 | ) | (7 | ) | | | (18 | ) |
| | 85 | | 526 | | 220 | 66 | 903 | |
| of
which special items | | | (37 | ) | (36 | ) | (72 | ) |

Net income from investments in 2006 were euro 903 million and concerned primarily: (i) Eni's share of income of affiliates accounted for with the equity method (euro 806 million), in particular affiliates in the Gas & Power and Refining & Marketing segments. The effects of the equity method of accounting include the gain (euro 73 million net to Eni) recorded by Galp Energia SGPS SA on the sale of regulated assets in the natural gas business to Rede Electrica Nacional, classified as special; (ii) dividends received by affiliates accounted for at cost (euro 98 million, of which euro 57 million related to Nigeria LNG); (iii) gains on disposal (euro 17 million).

ENI PRELIMINARY RESULTS FOR 2006 – 12 –

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Break-down of net income from investments

(million euro)

Fourth Quarter Full Year

2005 2006 Change 2005 2006 Change

| 156 — 4 | | 206 — 4 | | 50 | | Effect of the application of the equity method
of accounting — Dividends | 737 — 33 | | 806 — 98 | | 69 — 65 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (2 | ) | (4 | ) | (2 | ) | Net effect on disposal | 171 | | 17 | | (154 | ) |
| (12 | ) | (49 | ) | (37 | ) | Other
income (losses) from investments | (27 | ) | (18 | ) | 9 | |
| 146 | | 157 | | 11 | | | 914 | | 903 | | (11 | ) |

The euro 11 million decrease in net income from investments from 2005 was due essentially to lower gains related in particular to the recording in 2005 of the gain on the sale of Italiana Petroli SpA (euro 132 million), whose effects were offset in part by improved results of operations of affiliates in the Gas & Power segment, in particular Unión Fenosa Gas SA (Eni's interest equating to 50%) and Blue Stream Pipeline Co BV (Eni's interest equating to 50%) and higher dividends distributed by Nigeria LNG.

Income taxes

(million euro)

Fourth Quarter Full Year

2005 2006 Change 2005 2006 Change

1,086 1,105 19 Profit before income taxes — Italy 5,779 5,566 (213
3,358 3,061 (297 ) Outside Italy 11,596 14,825 3,239
4,444 4,166 (278 ) 17,375 20,391 3,016
Income taxes
530 480 (50 ) Italy 2,206 2,237 31
1,707 1,988 281 Outside Italy 5,922 8,331 2,409
2,237 2,468 231 8,128 10,568 2,440
( 317 ) 138 455 of which special items ( 609 ) 165 774
Tax
rate (%)
48.8 43.4 (5.4 ) Italy 38.2 40.2 2.0
50.8 65.9 14.1 Outside
Italy 51.1 56.2 5.1
50.3 59.2 8.9 46.8 51.8 5.0

Income taxes were euro 10,568 million, up euro 2,440 million from 2005 and reflected primarily higher income before taxes (euro 3,016 million). The 5 percentage points increase in statutory tax rate (from 46.8% to 51.8%) related mainly to: (i) the introduction of a windfall tax on upstream earnings in Algeria (euro 328 million, of which euro 149 million pertaining to taxation for the period); (ii) an increase in the supplemental tax rate implemented by the British Government, applicable to profit before taxes earned by operations in the North Sea, effective as from the start of the year, affecting both current taxation and deferred tax liabilities (with an overall impact of euro 198 million of which euro 107 million pertaining to taxation for the period); (iii) provisions for the settlement of a tax claim in Venezuela.

Minority interests

Minority interests were euro 606 million and concerned primarily Snam Rete Gas SpA (euro 287 million) and Saipem (euro 311 million).

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Consolidated balance sheet 1

Summarized group balance sheet aggregates the amount of assets and liabilities derived from the statutory balance sheet in accordance with functional criteria which consider the enterprise conventionally divided into the three fundamental areas focusing on resource investments, operations and financing. Management believes that this summarized group balance sheet is useful information in assisting investors to assess Eni's capital structure and to analyze its sources of funds and investments in fixed assets and working capital. Management uses the summarized group balance sheet to calculate key ratios such as return on capital employed (ROACE) and the proportion of net borrowings to shareholders' equity (leverage) intended to evaluate whether Eni's financing structure is sound and well-balanced.
(million
euro)

| Fixed assets — Property,
plant and equipment, net | 45,013 | | 43,408 | | 44,309 | | (704 | ) | 901 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Other tangible assets | | | 656 | | 629 | | 629 | | (27 | ) |
| Inventories
- compulsory stock | 2,194 | | 1,962 | | 1,827 | | (367 | ) | (135 | ) |
| Intangible assets, net | 3,194 | | 3,285 | | 3,756 | | 562 | | 471 | |
| Investments,
net | 4,311 | | 4,234 | | 4,267 | | (44 | ) | 33 | |
| Accounts receivable financing and securities
related to operations | 775 | | 640 | | 557 | | (218 | ) | (83 | ) |
| Net
accounts payable in relation to capital expenditure | (1,196 | ) | (912 | ) | (1,090 | ) | 106 | | (178 | ) |
| | 54,291 | | 53,273 | | 54,255 | | (36 | ) | 982 | |
| Net
working capital | | | | | | | | | | |
| Inventories | 3,563 | | 4,440 | | 4,743 | | 1,180 | | 303 | |
| Trade
accounts receivable | 14,101 | | 12,858 | | 15,195 | | 1,094 | | 2,337 | |
| Trade accounts payable | (8,170 | ) | (8,136 | ) | (10,546 | ) | (2,376 | ) | (2,410 | ) |
| Taxes
payable and reserve for net deferred income tax
liabilities | (4,857 | ) | (6,867 | ) | (5,372 | ) | (515 | ) | 1,495 | |
| Reserve for contingencies | (7,679 | ) | (7,741 | ) | (8,604 | ) | (925 | ) | (863 | ) |
| Other
operating assets and liabilities (2) | (526 | ) | (553 | ) | (601 | ) | (75 | ) | (48 | ) |
| | (3,568 | ) | (5,999 | ) | (5,185 | ) | (1,617 | ) | 814 | |
| Employee
termination indemnities and other benefits | (1,031 | ) | (1,054 | ) | (1,076 | ) | (45 | ) | (22 | ) |
| Capital employed, net | 49,692 | | 46,220 | | 47,994 | | (1,698 | ) | 1,774 | |
| Shareholders’
equity including minority interests | 39,217 | | 42,370 | | 41,229 | | 2,012 | | (1,141 | ) |
| Net borrowings | 10,475 | | 3,850 | | 6,765 | | (3,710 | ) | 2,915 | |
| Total
liabilities and shareholders’ equity | 49,692 | | 46,220 | | 47,994 | | (1,698 | ) | 1,774 | |

| (1) | For a
reconciliation to the statutory balance sheet see
Eni’s Report on the first half of 2006
"Reconciliation of summarized group balance sheet
and statement of cash flows to statutory schemes"
pages 45 and 46. |
| --- | --- |
| (2) | Include
operating financing receivables and securities related to
operations for euro 246 million (euro 492 million and
euro 261 million at December 31, 2005 and September 30,
2006 respectively) and securities covering technical
reserves of Padana Assicurazioni SpA for euro 417 million
(euro 453 million and euro 550 million at December 31,
2005 and September 30, 2006). |

The appreciation of the euro over other currencies, in particular the dollar (at December 31, 2006 the EUR/USD exchange rate was 1.317 as compared to 1.180 at December 31, 2005, up 11.6%) determined with respect to 2006 year-end an estimated decrease in the book value of net capital employed of about euro 2,250 million, in net equity of about euro 1,600 million and in net borrowings of about euro 650 million as a result of currency translations at December 31, 2006.

At December 31, 2006, net capital employed totalled euro 47,994 million, representing a decrease of euro 1,698 million from December 31, 2005.

Property, plant and equipment (euro 54,255 million) is substantially in line with December 31, 2005 (euro 54,291 million). Provisions for depreciation, amortization and write-downs (euro 6,421 million) and the effect of the appreciation of the euro over the dollar in the translation of financial statements of subsidiaries operating with currencies other than the euro (euro 2,100 million) offset capital expenditure for the period (euro 7,833 million).

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Other assets included, for a book value of dollar 829 million (corresponding to euro 629 million at the year end EUR/USD exchange rate), the assets related to the service contract for mining activities in the Dación area of the Venezuelan branch of Eni's subsidiary Eni Dación BV. With effective date April 1, 2006, the Venezuelan State oil company Petróleos de Venezuela SA (PDVSA) unilaterally terminated the service contract governing activities at the Dación oil field where Eni acted as a contractor, holding a 100% working interest. As a consequence, starting on the same day, operations at the Dación oil field are conducted by PDVSA. Eni proposed to PDVSA to agree on terms in order to recover the fair value of its Dación assets. On November 2006, Eni started an arbitration proceedings against Venezuela to preserve its rights. This proceeding is before the International Centre for Settlement of Investment Dispute (ICSID), a World Bank organization which resolves disagreements in relation to the violation of bilateral treaties for the protection of investments. Despite this action, Eni is still ready to negotiate a solution with PDVSA to obtain a fair compensation for its assets. Eni believes it has the right to be entitled to a compensation proportioned to the fair value of the relevant assets as consequence of the expropriation following the unilateral cancellation. This fair value, according to internal evaluations and evaluations made by qualified independent oil engineers companies, should not be lower than the book value of assets which has not been impaired.

The share of the Exploration & Production, Gas & Power and Refining & Marketing segments on net capital employed was 89.9% (90.9% at December 31, 2005).

Return On Average Capital Employed (ROACE)

Return on Average Capital Employed for the Group, on an adjusted basis is the return on Group average capital invested, calculated as the ratio between net adjusted profit before minority interests, plus net finance charges on net borrowings, less the related tax effect and net average capital employed. The tax rate applied on finance charges is the Italian statutory tax rate of 33%. The capital invested as of period-end used for the calculation of net average capital invested is obtained by deducting inventory gains or losses as of in the period, rectified from the related tax effect.

ROACE by business segment is determined as the ratio between adjusted net profit and net average capital invested pertaining to each business segment and rectifying the net capital invested as of period-end, from net inventory gains or losses (after applying the business segment specific tax rate).

Full Year 2006
(million
euro)
Adjusted net profit for the period 7,279 2,862 629 11,018
Exclusion
of after tax financial expenses - - - 79
Adjusted net profit unlevered 7,279 2,862 629 11,097
Capital
employed, net:
- at the beginning of period 20,206 18,978 5,993 49,692
- at the
end of period 18,590 18,891 5,766 48,027
Average capital employed, net 19,398 18,935 5,880 48,860
ROACE (%) 37.5 15.1 10.7 22.7

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Full Year 2005
(million
euro)
Adjusted net profit for the period 6,186 2,552 945 9,710
Exclusion
of after tax financial expenses - - - 42
Adjusted net profit unlevered 6,186 2,552 945 9,752
Capital
employed, net:
- at the beginning of period 17,954 18,387 5,081 45,983
- at the
end of period 20,206 18,898 5,326 48,933
Average capital employed, net 19,080 18,643 5,204 47,458
ROACE (%) 32.4 13.7 18.2 20.5

Net borrowings and leverage

Leverage is a measure of a company's level of indebtedness, calculated as the ratio between net borrowings which is calculated by excluding cash and cash equivalents and certain very liquid assets from financial debt and shareholders' equity, including minority interests. Management makes use of leverage in order to assess the soundness and efficiency of the Group balance sheet in terms of optimal mix between net borrowings and net equity, and to carry out benchmark analysis with industry standards. In the medium term, management plans to maintain a strong financial structure targeting a level of leverage up to 0.40.
(million
euro)
Debts and bonds 12,998 11,006 11,697 (1,301 ) 691
Cash and
cash equivalents (1,333 ) (6,459 ) (3,985 ) (2,652 ) 2,474
Securities not related to operations (931 ) (418 ) (552 ) 379 (134 )
Non-operating
financing receivables (259 ) (279 ) (395 ) (136 ) (116 )
Net borrowings 10,475 3,850 6,765 (3,710 ) 2,915
Shareholders’
equity including minority interest 39,217 42,370 41,229 2,012 (1,141 )
Leverage 0.27 0.09 0.16 (0.11 ) (0.07 )

Net borrowings at December 31, 2006 were euro 6,765 million, representing a decrease of euro 3,710 million from December 31, 2005 due mainly to cash inflow generated by operating activities (euro 17,003 million). Currency translation effects also contributed to the reduction in net borrowings.

Debts and bonds amounted to euro 11,697 million, of which euro 4,326 million were short-term (including the portion of long-term debt due within twelve months for euro 890 million) and euro 7,371 million were long-term.

At December 31, 2006, leverage was 0.16, compared with 0.27 at December 31, 2005.

Net borrowings increased by euro 2,915 million from September 30, 2006 (euro 3,850 million) as cash inflow generated by operating activities (euro 1,780 million) partially covered the financial requirements for capital expenditure and investments amounting to euro 2,963 million, the payment of an interim dividend for fiscal year 2006 by the parent company Eni SpA (euro 2,210 million) and the repurchase of own shares for euro 105 million. Currency translation effects (approximately euro 200 million) contributed positively.

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Changes in shareholders’ equity

(million euro)

| Shareholder’s equity at December 31,
2005 — Net profit
for the period | 9,823 | |
| --- | --- | --- |
| Dividends to shareholders | (4,610 | ) |
| Shares
repurchased | (1,241 | ) |
| Issue of ordinary share capital for employee
share incentive schemes | 85 | |
| Dividends
paid by consolidated subsidiaries to shareholders | (222 | ) |
| Effect on equity of the shares repurchased by
consolidated subsidiaries (Snam Rete Gas/Saipem) | (306 | ) |
| Exchange
differences from translation of financial statements
denominated in currencies other than euro | (1,628 | ) |
| Other changes | 111 | |
| Total
changes | | 2,012 |
| Shareholder’s equity at December 31,
2006 | | 41,229 |

Net equity at December 31, 2006 (euro 41,229 million) was up euro 2,012 million from December 31, 2005, due primarily to net profit before minority interest (euro 9,823 million), offset in part by the payment of Eni's 2005 dividends, the purchase of own shares and currency translation effects.

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Reclassified cash flow statement and change in net borrowings 1

Eni's summarized group cash flow statement derives from the statutory statement of cash flows. It allows to create a link between changes in cash and cash equivalents (deriving from the statutory cash flows statement) occurred from the beginning of period to the end of period and changes in net borrowings (deriving from the summarized cash flow statement) occurred from the beginning of period to the end of period. The measure enabling to make such a link is represented by free cash flow which is the cash in excess of capital expenditure needs. Starting from free cash flow it is possible to determine either: (i) changes in cash and cash equivalents for the period by adding/deducting cash flows relating to financing debts/receivables (issuance/repayment of debt and receivables related to financing activities), shareholders' equity (dividends paid, net repurchase of own shares, capital issuance) and the effect of changes in consolidation and of exchange differences; (ii) changes in net borrowings for the period by adding/deducting cash flows relating to shareholders' equity and the effect of changes in consolidation and of exchange differences.

(million euro)

| Fourth
Quarter — 2005 | 2006 | Full
Year — 2005 | 2006 | Change |
| --- | --- | --- | --- | --- |

2,207 1,698 Net profit before minority interest 9,247 9,823 576
Adjustments
to reconcile to cash generated from operating income
before changes in working capital:
2,051 1,568 - amortisation and depreciation and other non
monetary items 6,518 5,753 (765 )
(30 ) (4 ) - net
gains on disposal of assets (220 ) (59 ) 161
2,379 2,318 - dividends, interest, taxes and other changes 8,471 10,439 1,968
6,607 5,580 Cash
generated from operating income before changes in working
capital 24,016 25,956 1,940
(1,675 ) (917 ) Changes in working capital related to operations (2,422 ) (1,094 ) 1,328
(2,860 ) (2,863 ) Dividends
received, taxes paid, interest (paid) received (6,658 ) (7,859 ) (1,201 )
2,072 1,780 Net cash provided by operating activities 14,936 17,003 2,067
(2,464 ) (2,944 ) Capital
expenditure (7,414 ) (7,833 ) (419 )
(66 ) (19 ) Investments (127 ) (95 ) 32
40 201 Disposals 542 328 (214 )
255 407 Other cash flow related to capital expenditure,
investments and disposals 293 361 68
(163 ) (575 ) Free
cash flow 8,230 9,764 1,534
(49 ) (247 ) Borrowings (repayment) of debt related to
financing activities (109 ) 216 325
2,499 837 Changes in
short and long-term financial debt (540 ) (684 ) (144 )
(3,438 ) (2,412 ) Dividends paid and changes in minority interests
and reserves (7,284 ) (6,443 ) 841
(42 ) (77 ) Effect of
changes in consolidation and exchange differences 33 (201 ) (234 )
(1,193 ) (2,474 ) NET CASH FLOW FOR THE PERIOD 330 2,652 2,322

| Fourth
Quarter — 2005 | 2006 | Full
Year — 2005 | 2006 | Change |
| --- | --- | --- | --- | --- |

| (163 | ) | (575 | ) | Change in net borrowings — Free
cash flow | 8,230 | | 9,764 | | 1,534 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (19 | ) | | | Net borrowings of acquired companies | (19 | ) | | | 19 | |
| | | | | Net
borrowings of divested companies | 21 | | 1 | | (20 | ) |
| (501 | ) | 72 | | Exchange differences on net borrowings and other
changes | (980 | ) | 388 | | 1,368 | |
| (3,438 | ) | (2,412 | ) | Dividends
paid and changes in minority interests and reserves | (7,284 | ) | (6,443 | ) | 841 | |
| (4,121 | ) | (2,915 | ) | | (32 | ) | 3,710 | | 3,742 | |

(1) For a reconciliation of the summarised group cash flow statement to the statutory cash flow statement see Eni’s Report on the first half of 2006 "Reconciliation of summarized group balance sheet and cash flow statement to statutory schemes" pages 46 and 47.

Cash generated by operating activities came in at euro 17,003 million and with cash from divestments (euro 329 million), including net borrowings transferred of euro 1 million) allowed to cover: (i) financial requirements for capital expenditure and investments for euro 7,928 million; (ii) dividend payments amounting to euro 4,832 million, of which euro 2,400 million pertained to the payment of the balance of the dividend for fiscal year 2005 and euro 2,210 million pertained to the payment of an interim dividend for fiscal year 2006 by the parent company Eni SpA. Snam Rete Gas and Saipem also distributed dividends amounting to euro 207 million; (iii) the repurchase of own shares for euro 1,241 million by Eni SpA and for euro 477 million by Snam Rete Gas SpA and Saipem SpA and exchange rate differences of euro 650 million which allowed to reduce net borrowings by euro 3,710 million.

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From January 1, to December 31, 2006 a total of 53.13 million Eni shares were purchased by the company for a total cost of euro 1,241 million (representing an average cost of euro 23.35 per share). Since the inception of the share buy-back programme on September 1, 2000 Eni has repurchased 335 million shares, equal to 8.36% of its share capital, at a total cost of euro 5,512 million (representing an average cost of euro 16.45 per share).

Capital expenditure

(million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

1,517 1,937 420 27.7 Exploration & Production 4,965 5,203 238 4.8
411 453 42 10.2 Gas &
Power 1,152 1,174 22 1.9
317 272 (45 ) (14.2 ) Refining & Marketing 656 645 (11 ) (1.7 )
33 47 14 42.4 Petrochemicals 112 99 (13 ) (11.6 )
114 188 74 64.9 Engineering and Construction 349 591 242 69.3
22 38 16 72.7 Other
activities 48 72 24 50.0
50 48 (2 ) (4.0 ) Corporate and financial companies 132 88 (44 ) (33.3 )
(39 ) (39 ) .. Unrealized
profit in inventory (39 ) (39 ) ..
2,464 2,944 480 19.5 Capital expenditure 7,414 7,833 419 5.7

Capital expenditure amounted to euro 7,833 million, of which 89.7% related to the Exploration & Production, Gas & Power and Refining & Marketing segments.

Exploration & Production

(million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

34 139 105 308.8 Acquisitions of proved and unproved property 301 152 (149 ) (49.5 )
139 139 .. Italy 139 139 ..
North Africa 10 10 ..
8 (8 ) .. West
Africa 60 (60 ) ..
26 (26 ) .. Rest of World 241 3 (238 ) (98.8 )
321 706 385 119.9 Exploration 656 1,348 692 105.5
18 38 20 111.1 Italy 38 128 90 ..
85 91 6 7.1 North
Africa 153 270 117 76.5
45 366 321 .. West Africa 75 471 396 ..
61 75 14 23.0 North Sea 126 174 48 38.1
112 136 24 21.4 Rest of World 264 305 41 15.5
1,137 1,056 (81 ) (7.1 ) Development 3,952 3,629 (323 ) (8.2 )
141 133 (8 ) (5.7 ) Italy 411 403 (8 ) (1.9 )
275 209 (66 ) (24.0 ) North
Africa 1,007 701 (306 ) (30.4 )
254 294 40 15.7 West Africa 889 864 (25 ) (2.8 )
87 121 34 39.1 North Sea 385 406 21 5.5
380 299 (81 ) (21.3 ) Rest of World 1,260 1,255 (5 ) (0.4 )
25 36 11 44.0 Other 56 74 18 32.1
1,517 1,937 420 27.7 4,965 5,203 238 4.8

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Capital expenditure in the Exploration & Production segment amounted to euro 5,203 million and concerned essentially development) directed mainly outside Italy, in particular Kazakhstan, Angola and Egypt. Development expenditure in Italy concerned in particular the continuation of work for well drilling, plant and infrastructure in Val d'Agri and sidetrack and infilling work in mature areas. Exploration expenditure was directed for about 90% outside Italy. Exploration concerned the following countries in particular: Angola, Egypt, Norway, Nigeria and the Gulf of Mexico; in Italy, essentially the offshore of Sicily, the Po Valley and Central Italy. Exploration expenditure included the acquisition of new acreage of 152,000 square kilometers (99% operated by Eni).

In 2006 capital expenditure increased by euro 238 million, or 4.8% from 2005 due mainly to higher exploration expenditure in Egypt and Nigeria.

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Gas & Power

(million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

366 397 31 8.5 Capital expenditure — Italy 1,066 1,014 (52 ) (4.9 )
45 56 11 24.4 Outside Italy 86 160 74 86.0
19 22 3 15.8 Market 40 63 23 57.5
Italy 2 (2 ) (100.0 )
19 22 3 15.8 Outside
Italy 38 63 25 65.8
80 54 (26 ) (32.5 ) Distribution 182 158 (24 ) (13.2 )
243 287 44 18.1 Transport 691 724 33 4.8
217 253 36 16.6 Italy 643 627 (16 ) (2.5 )
26 34 8 30.8 Outside
Italy 48 97 49 102.1
69 90 21 30.4 Power generation 239 229 (10 ) (4.2 )
411 453 42 10.2 1,152 1,174 22 1.9

Capital expenditure in the Gas & Power segment totalled euro 1,174 million and related essentially to: (i) development and maintenance of Eni's primary transmission network in Italy (euro 627 million); (ii) the continuation of the construction of combined cycle power plants (euro 229 million) in particular at Ferrara and Brindisi; (iii) development and maintenance of Eni's natural gas distribution network in Italy (euro 158 million).

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Refining & Marketing

(million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

317 272 (45 ) (14.2 ) Capital expenditure 656 645 (11 ) (1.7 )
283 241 (42 ) (14.8 ) Italy 585 547 (38 ) (6.5 )
34 31 (3 ) (8.8 ) Outside Italy 71 98 27 38.0
154 139 (15 ) (9.7 ) Refining,
Supply and Logistic 349 376 27 7.7
154 139 (15 ) (9.7 ) Italy 349 376 27 7.7
114 90 (24 ) (21.1 ) Marketing 225 223 (2 ) (0.9 )
80 59 (21 ) (26.3 ) Italy 154 125 (29 ) (18.8 )
34 31 (3 ) (8.8 ) Outside
Italy 71 98 27 38.0
49 43 (6 ) (12.2 ) Other activities 82 46 (36 ) (43.9 )
317 272 (45 ) (14.2 ) 656 645 (11 ) (1.7 )

Capital expenditure in the Refining & Marketing segment amounted to euro 645 million and concerned: (i) refining, supply and logistics (euro 376 million) in Italy and flexibility improvement actions, in particular the start-up of construction of a new hydrocracking unit at the at the Sannazzaro refinery; (ii) upgrade of the refined product distribution network in Italy (euro 125 million); (iii) upgrade of the fuel distribution network and the purchase of service stations in the rest of Europe (euro 98 million).

Capital expenditure in the Oilfield Services, Construction and Engineering segment amounted to euro 591 million and concerned: (i) the conversion of the Margaux tanker ship into an FPSO vessel that will operate in Brazil on the Golfinho 2 field; (ii) maintenance and upgrading of equipment; (iii) beginning of fabrication and installation of facilities in the offshore phase of the Kashagan project in Kazakhstan.

Capital expenditure in the Petrochemical segment amounted to euro 99 million and concerned mainly environmental protection actions and compliance with safety and health regulations.

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Outlook

The outlook for Eni in 2007 remains positive, with key business trends for the year as follows:

| • | production of
liquids and natural gas is forecast to remain
stable from the previous year (1.77 mmboe/d in 2006).
Mature field decline in Italy and the North Sea is
expected to be offset by production growth in Libya, due
to the build-up of the Western Libyan Gas Project; |
| --- | --- |
| • | sales volumes of
natural gas in Europe are forecast to increase
from 2006 levels (9,436 mmcf/d). Major increases are
expected in the Iberian Peninsula, German/Austrian and
French markets; |
| • | sold production of electricity is expected to increase from 2006 levels (24.82 TWh) due
to the ramp-up of production capacity in Brindisi and the
planned start-ups of new capacity at the Ferrara power
plant; |
| • | refining throughputs on
Eni's account are forecast to decline slightly from 2006
(761 kbbl/d) due to the termination of the contract for
processing certain volumes of crude at Priolo refinery's
facilities owned by a third party to be offset by higher
throughputs expected at Gela, Livorno and Sannazzaro
refineries; |
| • | retail sales of refined products are expected to slightly increase in Italy due to planned
marketing initiatives, and in the rest of Europe due to
new acquisitions of service stations in target markets. |

In 2007, management expects to expand capital expenditure from 2006 level (euro 7.83 billion in 2006). Increases will be apportioned to the development of oil and natural gas reserves, upgrading of refineries and the retail network, and upgrading of natural gas import and transport infrastructure.

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Financial and Operating review by business segment

Exploration & Production

(million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 6,419 | | 6,152 | | (267 | ) | (4.2 | ) | Results — Net sales
from operations | 22,531 | | 27,173 | | 4,642 | | 20.6 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 3,561 | | 3,141 | | (420 | ) | (11.8 | ) | Operating profit | 12,592 | | 15,580 | | 2,988 | | 23.7 | |
| | | | | | | | | Exclusion
of inventory holding (gains) losses | | | | | | | | |
| 20 | | 54 | | 34 | | | | Exclusion of special items: | 311 | | 183 | | (128 | ) | | |
| (43 | ) | 51 | | 94 | | | | - asset
impairments | 247 | | 231 | | (16 | ) | | |
| | | (7 | ) | (7 | ) | | | - gains on disposal of assets | | | (61 | ) | (61 | ) | | |
| 6 | | 10 | | 4 | | | | -
provision for redundancy incentives | 7 | | 13 | | 6 | | | |
| 57 | | | | (57 | ) | | | - provision to the reserve for contingencies | 57 | | | | (57 | ) | | |
| 3,581 | | 3,195 | | (386 | ) | (10.8 | ) | Adjusted
operating profit | 12,903 | | 15,763 | | 2,860 | | 22.2 | |
| (21 | ) | (22 | ) | (1 | ) | | | Net financial incomes (expenses) (1) | (80 | ) | (59 | ) | 21 | | | |
| (10 | ) | (18 | ) | (8 | ) | | | Net
incomes (expenses) from investments (1) | 10 | | 85 | | 75 | | | |
| (1,978 | ) | (1,851 | ) | 127 | | | | Income taxes (1) | (6,647 | ) | (8,510 | ) | (1,863 | ) | | |
| 55.7 | | 58.7 | | 3.0 | | | | Tax
rate adjusted (%) | 51.8 | | 53.9 | | 2.1 | | | |
| 1,572 | | 1,304 | | (268 | ) | (17.0 | ) | Adjusted net profit | 6,186 | | 7,279 | | 1,093 | | 17.7 | |
| | | | | | | | | Results
also include: | | | | | | | | |
| 1,265 | | 1,414 | | 149 | | 11.8 | | amortizations and depreciations | 4,101 | | 4,776 | | 675 | | 16.5 | |
| 274 | | 419 | | 145 | | 52.9 | | - of
which amortizations of exploration expenditure | 618 | | 1,075 | | 457 | | 73.9 | |
| | | | | | | | | Average
realizations | | | | | | | | |
| 52.26 | | 54.85 | | 2.59 | | 5.0 | | Liquids (2) ($/bbl) | 49.09 | | 60.09 | | 11.00 | | 22.4 | |
| 171.27 | | 190.39 | | 19.12 | | 11.2 | | Natural
gas ($/mmcf) | 158.94 | | 187.25 | | 28.31 | | 17.8 | |
| 43.53 | | 45.53 | | 2.00 | | 4.6 | | Total hydrocarbons ($/boe) | 41.06 | | 48.87 | | 7.81 | | 19.0 | |
| | | | | | | | | Average oil marker prices | | | | | | | | |
| 56.90 | | 59.68 | | 2.78 | | 4.9 | | Brent
dated ($/bbl) | 54.38 | | 65.14 | | 10.76 | | 19.8 | |
| 47.86 | | 46.26 | | (1.60 | ) | (3.3 | ) | Brent dated (euro /bbl) | 43.71 | | 51.86 | | 8.15 | | 18.6 | |
| 59.99 | | 59.94 | | (0.05 | ) | (0.1 | ) | West Texas
Intermediate ($/bbl) | 56.44 | | 66.00 | | 9.56 | | 16.9 | |
| 432.96 | | 235.20 | | (197.76 | ) | (45.7 | ) | Gas Henry Hub ($/kmc) | 311.48 | | 238.02 | | (73.46 | ) | (23.6 | ) |

| (1) | Excluding
special items. |
| --- | --- |
| (2) | Including
condensates. |

Result

Fourth Quarter

The adjusted operating profit of the Exploration & Production division totalled euro 3,195 million, down euro 386 million, or 10.8% from the fourth quarter of 2005 reflecting primarily: (i) an adverse impact of approximately euro 331 million resulting from the appreciation of the euro versus the dollar; (ii) an increased exploration expense (up euro 145 million; euro 159 million on a constant exchange rate basis). These negatives were partly offset by higher realizations in dollars (oil up 5%, natural gas up 11.2%).

The adjusted net profit was euro 1,304 million, down euro 268 million over the fourth quarter of 2005 (or 17%), also impacted by a higher adjusted tax rate, from 55.7% to 58.7%, primarily due to the Algerian windfall tax.

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Special charges excluded from the adjusted operating profit were euro 54 million in the fourth quarter relating primarily to asset impairments.

Other special charges for the quarter included primarily the deferred tax impact of the Algerian windfall tax for euro 179 million.

Full Year

The adjusted operating profit for the year was euro 15,763 million, up euro 2,860 million from one year ago, reflecting higher realizations in dollars (oil up 22.4%, natural gas up 17.8%) combined with higher sold production volumes (up 10.2 mmboe, or 1.7%). This better operating performance was partly offset by: (i) increased production costs and amortization charges related in particular to the higher cost of developing new fields and maintaining production levels at mature fields and sector-specific inflation; (ii) an increased exploration expense; (iii) the effect of the appreciation of the euro over the dollar (approximately euro 155 million).

This better operating performance was partly offset by an increase in the adjusted tax rate (up 2.1% from 51.8% to 53.9%), resulting in a 17.7% increase in the adjusted net profit for the year.

Special charges excluded from the adjusted operating profit were euro 183 million and reflected mineral asset impairments offset in part by gains on the disposal of mineral assets. Other special charges included the deferred tax impact of the windfall tax in Algeria, the supplemental tax rate applicable to profit earned in the North Sea enacted by the British Government and a charge for the settlement of a taxation proceeding against a Venezuelan authority for a combined amount of euro 342 million.

Production

(million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

1,806 1,796 (10 ) (0.6 ) Daily production of oil and natural gas (1) (kboe/d) 1.737 1.770 33 1.9
254 232 (22 ) (8.7 ) Italy 261 238 (23 ) (8.8 )
522 571 49 9.4 North Africa 480 555 75 15.6
372 372 West
Africa 343 372 29 8.5
291 291 North Sea 283 282 (1 ) (0.4 )
367 330 (37 ) (10.1 ) Rest of
world 370 323 (47 ) (12.7 )
161.0 159.2 (2.2 ) (1.1 ) Oil and natural gas production sold (1) (mboe) 614.9 625.1 10.2 1.7

(1) Includes Eni’s share of production of joint ventures accounted for under the equity method of accounting.

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Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

1,132 1,079 (53 ) (4.7 ) Production of liquids (1) (kbbl/d) 1,111 1,079 (32 ) (2.9 )
85 80 (5 ) (5.9 ) Italy 86 79 (7 ) (8.1 )
315 334 19 6.0 North Africa 308 329 21 6.8
334 315 (19 ) (5.7 ) West
Africa 310 322 12 3.9
176 181 5 2.8 North Sea 179 178 (1 ) (0.6 )
222 169 (53 ) (23.9 ) Rest of
world 228 171 (57 ) (25.0 )

(1) Includes Eni’s share of production of entities accounted for with the equity method of accounting.

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

3,885 4,132 247 6.4 Production of natural gas (1) (mmcf/d) 3,602 3,955 353 9.8
953 883 (70 ) (7.4 ) Italy 1,024 918 (106 ) (10.3 )
1,201 1,377 176 14.7 North Africa 989 1,307 318 32.1
212 318 106 50.0 West
Africa 177 282 105 60.0
671 636 (35 ) (5.3 ) North Sea 600 600
848 918 70 8.3 Rest of
world 812 848 36 4.3

(1) Includes Eni’s share of production of entities accounted for with the equity method of accounting.

Fourth Quarter

Oil and natural gas production in the fourth quarter averaged 1,796 kboe/d virtually unchanged from the fourth quarter of 2005 (down 0.6%). Production for the quarter was impacted by the unilateral cancellation of the Dación field contract by the Venezuelan state company PDVSA with effect from April 1, 2006 (down 61 kboe/d). Production increases were driven primarily by start-ups/full production of large gas projects (Libya, Nigeria, Australia and Croatia) and liquid production growth in Libya, the United States and Kazakhstan, where the positive contribution was offset in part by mature field decline and the impact of outages and disruptions in Nigeria due to security issues.

Daily production of oil and condensates for the fourth quarter (1,079 kbbl/d) increased mainly in: (i) Libya due to full production at Bahr Essalam (Eni's interest 50%), and el Feel (Eni's interest 23.3%); (ii) in the United States, due to the full recovery of production at facilities damaged by hurricanes in the third and fourth quarters of 2005; (iii) Kazakhstan due to a better field performance; (iv) Norway due to full production at the Kristin field (Eni's interest 8.25%). Production decreased in Venezuela and Nigeria.

Daily production of natural gas for the fourth quarter (4,132 mmcf/d) increased mainly in Libya (achievement of full production at the Bahr Essalam field), Nigeria (start-up of trains 4 and 5 of the Bonny LNG plant), Australia (start-up of the gas phase of the Bayu Undan field) and Croatia (start-up of the Ika, Ida and Ivana C-K fields). Declines in production were attributable mainly to mature field decline in Italy and in the United Kingdom.

Full Year

In 2006, daily production of oil and gas averaged 1,770 kboe/d, increasing by 33 kboe/d from 2005 (up 1.9%), despite the impact of the loss of production of the Dación oil field in Venezuela (down 46 kboe/d) and of adverse entitlement effects (down 22 kboe/d) in PSAs 1 and buy-back contracts due to higher oil prices. Libya, Egypt, Nigeria, Australia and Croatia were the main growth areas in natural gas, while oil production increased in Angola and Libya. Declines in production were attributable to mature fields and technical problems in Nigeria due to social unrest. Production outside Italy covered 87% of the total (85% in 2005).

(1) In PSAs the national oil company awards the execution of exploration and production activities to the international oil company (contractor). The contractor bears the mineral and financial risk of the initiative and, when successful, recovers capital expenditure and costs incurred in the year (Cost oil) by means of a share of production. This production share varies along with international oil prices. In certain PSAs changes in international oil prices also affect the share of production to which the contractor is entitled in order to remunerate its capital employed (Profit oil). A similar scheme applies to buy-back contracts.

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Daily production of oil and condensates for the full year (1,079 kbbl/d) increased mainly in: (i) Angola due to the full production of the Kissanje and Dikanza fields in Phase B of the development of Kizomba in Block 15 (Eni's interest 20%) and the start-up of the Benguela/Belize/Lobito/Tomboco fields in Block 14 (Eni's interest 20%): (ii) Libya, due to the reaching of full production at the Bahr Essalam offshore field (Eni's interest 50%) as part of the Western Libyan Gas Project and the el Feel field (Eni's interest 23.3%). Production decreased in Venezuela and Nigeria, where these negatives were offset in part by the reaching of full production at Bonga in OML 118 permit (Eni's interest 12.5%) and Italy due to technical problems occurred at the FPSO unit in the Aquila field and to production declines.

Daily production of natural gas for the full year (3,995 mmcf/d/d) increased mainly in: (i) Libya, due to the reaching of full production at the Bahr Essalam offshore field (Eni's interest 50%): (ii) Egypt, for full production/start-up of the Barboni and Anshuga fields the increase in the number of production wells at the el Temsah 4 platform in the offshore of the Nile Delta and increased supplies to the Damietta liquefaction plant (Eni's interest 40%); (iii) Nigeria due to increased supplies to the Bonny LNG plant (Eni's interest 10.4%) related to the start-up of trains 4 and 5; (iv) Australia, due to the start-up of supplies to the Darwin liquefaction plant linked to the Bayu Undan liquid and gas field (Eni's interest 12.04%); (v) Croatia, due to the start-up of the Ika, Ida and Ivana C-K fields (Eni's interest equating to 50%) in the Adriatic offshore. These increases were offset in part by a decline registered in Italy resulting from the production decline of mature fields.

Hydrocarbon production sold amounted to 625.1 million boe. The 20.8 million boe difference over production was due essentially to own consumption of natural gas (18.4 million boe).

Eni's proved reserves of oil and natural gas at December 31, 2006 stood at 6,436 million boe (oil and condensates 3,481 million barrels; natural gas 2,955 million boe), decreasing 401 million boe from December 31, 2005, or 6%.

The following table describes the evolution of proved reserves in 2006:

(mboe)

| Net proved reserves at December 31, 2005 — Revisions,
extensions and discoveries and improved recovery | 417 | | 6,837 | |
| --- | --- | --- | --- | --- |
| Production | (646 | ) | (229 | ) |
| | | | 6,608 | |
| Divestment of proved property | | | (2 | ) |
| Unilateral
cancellation by PDVSA of the contract concerning the
Dación field | | | (170 | ) |
| Net proved reserves at December 31, 2006 | | | 6,436 | |

Additions to proved reserves booked in 2006 were 417 million boe and derived from: (i) extensions and discoveries (161 million boe) in particular in Kazakhstan, Algeria, Libya and Egypt; (ii) improved recovery (105 million boe) in particular in Algeria, Angola, Egypt and Nigeria, and (iii) net upward revisions of 151 million boe mainly in Kazakhstan, Libya and Egypt.

The unilateral cancellation of the service contract for the Dación oilfield by the Venezuelan State oil company PDVSA determined a decrease in the Eni's proved reserves of 170 million barrels.

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In 2006 Eni's proved reserves replacement ratio 2 was 65% (38% all sources, including the loss of proved reserves at the Venezuelan Dación oilfield and other disposals) representing 10 years of remaining production at the current rate (10.8 as at December 31, 2005).

Considering the adverse entitlement impact in certain PSAs and buy-back contracts resulting from higher oil prices (Brent price was 58.925 dollars/barrel at December 31, 2005) and assuming Brent constant at $40 per barrel when determining entitlements in PSAs, the three-year average proved reserve replacement ratio would be 106%.

At December 31, 2006, Eni's proved developed reserves stood at 4,059 million boe (oil and condensates 2,144 million barrels, natural gas 1,915 million boe) or 63% of total proved reserves (63% as of December 31, 2005).

(2) Ratio of changes in proved reserves for the year resulting from revisions of previously reported reserves, improved recovery, extensions, discoveries and sales or purchases of minerals in place, to production for the year. A ratio higher than 100% indicates that more proved reserves were added than produced in a year. The Reserve Replacement Ratio is a measure used by management to indicate the extent to which production is replaced by proved oil and gas reserves booked according with the Securities Exchange Commission (SEC) criteria under the S-X Regulation, Rule 4-10. The Reserve Replacement Ratio is not an indicator of future production because the ultimate development and production of reserves is subject to a number of risks and uncertainties. These include the risks associated with the successful completion of large-scale projects, including addressing ongoing regulatory issues and completion of infrastructure, as well as changes in oil and gas prices, political risks and geological and other environmental risks.

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Gas & Power

(million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 7,419 | | 8,170 | | 751 | | 10.1 | | Results — Net sales
from operations | 22,969 | | 28,368 | | 5,399 | | 23.5 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 641 | | 1,303 | | 662 | | 103.3 | | Operating profit | 3,321 | | 3,802 | | 481 | | 14.5 | |
| (32 | ) | (41 | ) | (9 | ) | | | Exclusion
of inventory holding (gains) losses | (127 | ) | (67 | ) | 60 | | | |
| 281 | | 7 | | (274 | ) | | | Exclusion of special items | 337 | | 147 | | (190 | ) | | |
| | | | | | | | | of
which: | | | | | | | | |
| 290 | | 2 | | (292 | ) | | | - non-recurring items | 290 | | 22 | | (268 | ) | | |
| (9 | ) | 9 | | 18 | | | | -
others special items: | 47 | | 125 | | 78 | | | |
| 1 | | | | (1 | ) | | | asset
impairments | 1 | | 51 | | 50 | | | |
| 3 | | 2 | | (1 | ) | | | environmental
provisions | 31 | | 44 | | 13 | | | |
| 3 | | 15 | | 12 | | | | provisions for
redundancy incentives | 8 | | 37 | | 29 | | | |
| (16 | ) | (8 | ) | 8 | | | | other | 7 | | (7 | ) | | | | |
| 890 | | 1,269 | | 379 | | 42.6 | | Adjusted operating profit | 3,531 | | 3,882 | | 351 | | 9.9 | |
| 890 | | 1,269 | | 379 | | 42.6 | | Adjusted operating profit by business | 3,531 | | 3,882 | | 351 | | 9.9 | |
| 516 | | 832 | | 316 | | 61.2 | | Market and
distribution | 1,777 | | 2,062 | | 285 | | 16.0 | |
| 254 | | 286 | | 32 | | 12.6 | | Transport in Italy | 1,162 | | 1,087 | | (75 | ) | (6.5 | ) |
| 109 | | 144 | | 35 | | 32.1 | | Transport
outside Italy | 448 | | 579 | | 131 | | 29.2 | |
| 11 | | 7 | | (4 | ) | (36.4 | ) | Power generation | 144 | | 154 | | 10 | | 6.9 | |
| 13 | | (1 | ) | (14 | ) | | | Net financial incomes (expenses) (a) | 37 | | 16 | | (21 | ) | | |
| 76 | | 97 | | 21 | | | | Net
incomes (expenses) from investments (a) | 370 | | 489 | | 119 | | | |
| (339 | ) | (492 | ) | (153 | ) | | | Income taxes (a) | (1,386 | ) | (1,525 | ) | (139 | ) | | |
| 34.6 | | 36.0 | | 1.4 | | | | Adjusted
tax rate (%) | 35.2 | | 34.8 | | (0.4 | ) | | |
| 640 | | 873 | | 233 | | 36.4 | | Adjusted net profit | 2,552 | | 2,862 | | 310 | | 12.1 | |

(a) Excludes special items.

Result

Fourth Quarter

The adjusted operating profit of the Gas & Power division totalled euro 1,269 million, up euro 379 million, or 42.6% from the fourth quarter of 2005 reflecting primarily: (i) the partial reversal of a provision accrued in the 2005 financial statements as an estimate of the impact of regulation implemented by the Authority for Electricity and Gas with Resolution No. 248/2004 3 ; (ii) higher natural gas selling margins supported by a favorable trading environment, relating in particular to movements in the euro vs. the dollar exchange rates.

These positive factors were partly offset by a decline in natural gas sales by consolidated subsidiaries (down 192 mmcf/d, or 2%) and lower volumes distributed through low-pressure pipelines to the Italian retail market due to mild weather conditions.

The adjusted net profit of the Gas & Power division increased by euro 233 million also reflecting the increased contribution of certain equity-accounted entities, in particular Unión Fenosa Gas in Spain.

Special charges for the quarter (euro 7 million) referred to redundancy incentives.

(3) The impact of the regulatory regime was determined based on the indexation mechanism set out by Resolution No. 248/2004 from the Authority for Electricity and Gas, and certain resolutions enacting Resolution No. 248/2004, this in spite of the fact that Resolution No. 248/2004 was annulled by an administrative body due to certain formal flaws.

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Full Year

The adjusted operating profit of the Gas & Power division rose by euro 351 million or 9.9% to euro 3,882 million, primarily reflecting higher selling margins on natural gas against the backdrop of a favorable trading environment and the reduced impact of the tariff regime implemented by the Authority for Electricity and Gas with Resolution No. 248/2004. Growth in natural gas sales by consolidated subsidiaries (up 304 mmcf/d, or 3.8%), in volumes transported outside Italy due to the coming on line of volumes transported through the Greenstream gasline from Libya, and in electricity production sold (up 2.05 TWh, or 9%) contributed positively. These positives were partly offset by a lower operating result from transportation activities in Italy due to the tariff regime enacted by the Authority for Electricity and Gas with Resolution No. 166/2005 and a lower operating result from distribution activities due to lower volumes. Also higher purchase costs were incurred in the first quarter of the year, owing to a climatic emergency.

Full year adjusted net profit of euro 2,862 million increased by euro 310 million from 2005 (up 12.1%) and also benefited from the improved performance of certain equity-accounted entities.

Special charges for the full year recorded in the operating profit (euro 147 million) included certain non-recurring charges pertaining to fines imposed by the Authority for Electricity and Gas, and impairments of certain intangible assets, redundancy incentives and environmental provisions. Other special items pertained to Eni's share of a gain recorded by the Galp affiliate on the sale of certain regulated gas assets.

Sales

(millions of cubic feet)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

6,015 5,470 (545 ) (9.1 ) Italy to third parties * 5,077 4,944 (133 ) (2.6 )
1,535 1,386 (149 ) (9.7 ) Wholesalers
(selling companies) 1,166 1,132 (34 ) (2.9 )
215 215 Gas release 189 194 5 2.6
4,265 3,869 (396 ) (9.3 ) End
customers 3,722 3,619 (103 ) (2.8 )
1,432 1,344 (88 ) (6.2 ) Industrial
users 1,265 1,290 25 2.0
1,804 1,651 (153 ) (8.5 ) Power
generation 1,703 1,613 (90 ) (5.3 )
1,029 875 (154 ) (14.9 ) Residential 755 716 (39 ) (5.1 )
564 595 31 5.4 Own
consumption * 536 593 57 10.6
2,702 3,063 361 13.4 Rest of Europe * 2,268 2,687 419 18.5
84 46 (38 ) (45.5 ) Outside
Europe 113 74 (39 ) (35.0 )
9,366 9,174 (192 ) (2.0 ) Sales and own consumption of subsidiaries 7,994 8,298 304 3.8
787 756 (31 ) 3.9 Sales
of affiliates (Eni’s share) 685 740 55 8.1
12 4 (8 ) .. Italy * 7 2 (5 ) (71.4 )
741 702 (39 ) (5.2 ) Rest of
Europe * 626 666 40 6.3
35 50 15 44.4 Outside Europe 52 73 21 38.9
10,153 9,930 (223 ) (2.2 ) Total
natural gas sales and own consumption 8,679 9,038 359 4.1
10,564 10,406 (158 ) (1.5 ) Sales
of natural gas in Europe 9,076 9,435 359 4.0
10,034 9,834 (200 ) (2.0 ) G&P in Europe * 8,513 8,892 379 4.4
530 572 42 8.0 Upstream
in Europe 563 544 (19 ) (3.4 )
6.07 6.07 Electricity
production sold (TWh) 22.77 24.82 2.05 9.0
  • Market sectors denoted with an asterisk are included within "G&P in Europe".

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Fourth Quarter

Natural gas sales in Europe for the fourth quarter amounted to 10,406 mmcf/d (including own consumption and sales by affiliates), down 158 mmcf/d from the fourth quarter of 2005 due primarily to the negative impact of mild weather conditions on sales in the Italian market (down 514 mmcf/d or 7.8%). All market segments posted lower volumes: the thermoelectric sector (down 154 mmcf/d), the residential and commercial sector (down 154 mmcf/d), the wholesaler sector (down 149 mmcf/d) and the industrial sector (down 88 mmcf/d).

The decline in the domestic market was partly offset by growth in other European markets (up 322 mmcf/d or 4%) in particular in sales under long-term supply contracts to Italian importers and supplies to the Austrian, German and French markets.

Sales of natural gas by Eni's affiliates, net to Eni and net of Eni's supplies, were 702 mmcf/d, 39 mmcf/d lower, related mainly to GVS and related to: (i) GVS (Eni's interest 50%) with 303 mmcf/d; (ii) Unión Fenosa Gas (Eni's interest 50%) with 242 mmcf/d.

Eni transported 2,871 mmcf/d of natural gas on behalf of third parties, up 169 mmcf/d from the fourth quarter of 2005, or 2.5%.

Electricity production sold was 6.07 TWh, substantially stable from a year ago.

Full Year

Natural gas sales in Europe (9,435 mmcf/d, including own consumption and Eni's share of affiliates sales) were up 359 mmcf/d from 2005, or 4.1%, due to higher sales in the rest of Europe (459 mmcf/d, up 15.8%), higher supplies of natural gas to Eni's wholly-owned subsidiary EniPower's for power generation (57 mmcf/d, up 10.6%) offset in part by lower sales by subsidiaries in Italy (133 mmcf/d, down 2.6%).

In an increasingly competitive market, natural gas sales of subsidiaries in Italy (4,944 mmcf/d) declined by 133 mmcf/d from 2005, due to lower supplies related to mild weather conditions in the fourth quarter, negatively affecting sales volumes to the power generation segment (down 90 mmcf/d), to residential and commercial users (down 39 mmcf/d) and to wholesalers (down 34 mmcf/d) offset in part by higher sales to the industrial sector (up 25 mmcf/d). Sales under the so called gas release (194 mmcf/d) increased by 5 mmcf/d from 2005.

In 2006, natural gas sales of subsidiaries in the rest of Europe increased by 419 mmcf/d to 2,687 mmcf/d, or 18.5%, reflecting a growth in (i) sales under long-term supply contracts to Italian importers (up 233 mmcf/d) for the progressive reaching of full supplies from Libyan fields; (ii) supplies to the Turkish market (up 118 mmcf/d); (iii) Germany and Austria (up 81 mmcf/d) essentially due to increased spot sales to Gaz de France and Econgas and higher supplies to other industrial operators; (iv) France (up 41 mmcf/d) relating to higher supplies to industrial operators. This positive was partly offset by a decrease in sales in Hungary (down 28 mmcf/d) and Northern Europe (down 10 mmcf/d).

Sales of natural gas by Eni's affiliates in the rest of Europe, net to Eni and net of Eni's supplies, amounted to 666 mmcf/d, up 40 mmcf/d mainly to Unión Fenosa Gas and concerned: (i) GVS (Eni's interest 50%) with 284 mmcf/d; (ii) Unión Fenosa Gas (Eni's interest 50%) with 210 mmcf/d.

Eni transported 2,990 mmcf/d of natural gas on behalf of third parties in Italy, an increase of 66 mmcf/d from 2005, up 2.34%.

In 2006, electricity production sold increased by 2.05 TWh to 24.82 TWh (up 9%), reflecting the continuing ramp-up of new production capacity, in particular at the Brindisi plant (up 3.05 TWh), whose effects were offset in part by the standstill of the Ravenna power plant (down 0.85 TWh).

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Refining & Marketing

(million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 9,555 | | 8,579 | | (976 | ) | (10.2 | ) | Results — Net sales
from operations | 33,732 | | 38,210 | | 4.478 | | 13.3 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 329 | | (386 | ) | (713 | ) | .. | | Operating profit | 1,857 | | 319 | | (1,538 | ) | (82.8 | ) |
| (177 | ) | 386 | | 563 | | | | Exclusion
of inventory holding (gains) losses | (1,064 | ) | 215 | | 1,279 | | | |
| 227 | | 148 | | (79 | ) | | | Exclusion of special items | 421 | | 256 | | (165 | ) | | |
| | | | | | | | | of
which: | | | | | | | | |
| | | 109 | | 109 | | | | Non-recurring items | | | 109 | | 109 | | | |
| 227 | | 39 | | (188 | ) | | | Other
special items: | 421 | | 147 | | (274 | ) | | |
| 5 | | 13 | | 8 | | | | - impairments | 5 | | 14 | | 9 | | | |
| 157 | | 27 | | (130 | ) | | | -
environmental charges | 337 | | 111 | | (226 | ) | | |
| 13 | | 30 | | 17 | | | | - provision for redundancy incentives | 22 | | 47 | | 25 | | | |
| 8 | | (4 | ) | (4 | ) | | | -
provision to the reserve for contingencies | 39 | | 8 | | (31 | ) | | |
| 44 | | (35 | ) | (79 | ) | | | - other | 18 | | (33 | ) | (51 | ) | | |
| 379 | | 148 | | (231 | ) | (60.9 | ) | Adjusted
operating profit | 1,214 | | 790 | | (424 | ) | (34.9 | ) |
| 29 | | 31 | | 2 | | | | Net incomes (expenses) from investments (a) | 231 | | 184 | | (47 | ) | | |
| (187 | ) | (64 | ) | 123 | | | | Income
taxes (a) | (500 | ) | (345 | ) | 155 | | | |
| 45.8 | | 35.8 | | (10.0 | ) | | | Adjusted tax rate (%) | 34.6 | | 35.4 | | 0.8 | | | |
| 221 | | 115 | | (106 | ) | (48 | | Adjusted
net profit | 945 | | 629 | | (316 | ) | (33.4 | ) |
| | | | | | | | | Global
indicator refining margin | | | | | | | | |
| 5.05 | | 2.18 | | (2.87 | ) | (56.8 | ) | Brent dated ($/bbl) | 5.78 | | 3.79 | | (1.99 | ) | (34.4 | ) |
| 4.25 | | 1.69 | | (2.56 | ) | (60.2 | ) | Brent
dated (euro /bbl) | 4.65 | | 3.02 | | (1.63 | ) | (35.1 | ) |
| 7.73 | | 4.87 | | (2.86 | ) | (37.0 | ) | Ural ($/bbl) | 8.33 | | 6.50 | | (1.83 | ) | (22.0 | ) |

(a) Excluding special items.

Result

Fourth Quarter

The adjusted operating profit of the Refining & Marketing division was euro 148 million, down euro 231 million, or 60.9% from the fourth quarter of 2005 primarily reflecting: (i) lower realized refining margins attributable to an unfavorable trading environment (Brent margins were down $2.87/bbl, or 56.8% from a year ago), exacerbated by the negative impact of the appreciation of the euro over the dollar. These negatives were partly offset by the benefit deriving from the higher profitability of processed crudes and the decline in operating performance of Italian marketing activities due to the adverse impact of mild weather conditions on sales of refined products for heating uses.

The adjusted net profit for the fourth quarter was euro 115 million, down euro 106 million, or 48%, from the fourth quarter of 2005, primarily reflecting the decrease in the operating profit.

Special charges excluded from the adjusted operating profit were euro 148 million in the fourth quarter, reflecting primarily the impact of a non recurring charge related to a fine imposed by the Italian Antitrust Authority, and environmental provisions and provisions for redundancy incentives.

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Full Year

The adjusted operating profit for the full year was euro 790 million, down euro 424 million, or 34.9%, from a year ago reflecting primarily: (i) lower realized refining margins reflecting the unfavorable trading environment and the appreciation of the euro versus the dollar, combined with the impact of longer refinery standstills due to planned maintenance partly offset by the higher profitability of processed crudes; (ii) a decline in the operating performance of Italian marketing activities due to lower volumes sold which were negatively affected by the mild weather conditions registered in the fourth quarter and the divestment of Italiana Petroli carried out in September 2005.

On the positive side marketing activities in the rest of Europe performed well as a result of higher retail margins and higher volumes sold.

The adjusted net profit for 2006 was euro 629 million, down euro 316 million, or 33.4%, from 2005, reflecting primarily a decrease in the operating profit.

Special charges excluded from the adjusted operating profit were euro 256 million, reflecting primarily the impact of a non recurring charge related to a fine imposed by the Italian Antitrust Authority, and environmental provisions and provisions for redundancy incentives.

Throughputs and sales

(kbbl/d)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 715 | 718 | 3 | | 0.4 | | Refining throughputs and sales — Refining
throughputs on own account Italy | 684 | 667 | (17 | ) | (2.5 | ) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 98 | 95 | (3 | ) | (3.1 | ) | Refining throughputs on own account Rest of
Europe | 91 | 94 | 3 | | 3.3 | |
| 572 | 584 | 12 | | 2.1 | | Refining
throughputs of wholly-owned refineries | 547 | 543 | (4 | ) | (0.7 | ) |
| 100 | 100 | | | | | Utilization rate of balanced capacity (%) | 100 | 100 | | | | |
| 1,084 | 1,046 | (38 | ) | (3.5 | ) | Sales | 1,033 | 1,023 | (10 | ) | (1.0 | ) |
| 175 | 171 | (4 | ) | (2.3 | ) | Retail sales Italy Agip brand | 175 | 173 | (2 | ) | (1.1 | ) |
| | | | | | | Retail
sales Italy IP brand | 26 | | (26 | ) | .. | |
| 72 | 77 | 5 | | 6.9 | | Retail sales rest of Europe | 73 | 76 | 3 | | 4.1 | |
| 225 | 205 | (20 | ) | (8.9 | ) | Wholesale
Italy | 210 | 202 | (8 | ) | (3.8 | ) |
| 86 | 84 | (2 | ) | (2.3 | ) | Wholesale Rest of Europe | 82 | 84 | 2 | | 2.4 | |
| 9 | 8 | (1 | ) | (11.1 | ) | Wholesale
Rest of World | 8 | 8 | | | | |
| 517 | 501 | (16 | ) | (3.1 | ) | Other sales | 459 | 480 | 21 | | 4.6 | |
| | | | | | | Refined
product sales by region | | | | | | |
| 624 | 602 | (22 | ) | (3.5 | ) | Italy | 606 | 598 | (8 | ) | (1.3 | ) |
| 159 | 161 | 2 | | 1.3 | | Rest of
Europe | 155 | 160 | 5 | | 3.2 | |
| 301 | 283 | (18 | ) | (6.0 | ) | Rest of World | 271 | 264 | (7 | ) | (2.6 | ) |

Fourth Quarter

Refining throughputs on Eni's account for the fourth quarter of 2006 in Italy and outside Italy were 813 kbbl/d, in line with the fourth quarter of 2005, due principally to higher throughputs processed at the Venice, Livorno and Taranto refineries. This was partly offset by lower volumes processed at the Sannazzaro refinery, at the Gela refinery and at the third party Priolo refinery (as a result of the accident occurred late in April), in addition to decreased throughputs in the Czech Republic.

Sales of refined products for the fourth quarter decreased by 38 kbbl/d to 1,046 kbbl/d, compared to the fourth quarter of 2005, due to lower sales on both the Agip branded network and the wholesale markets in Italy (down 24 kbbl/d), partly offset by increased volumes sold in retail markets of the rest of Europe (up 5 kbbl/d).

Sales in the retail market in Italy decreased by 4 kbbl/d to 171 kbbl/d, due primarily to an increased competition. Sales in the wholesale market in Italy decreased by 20 kbbl/d to 205 kbbl/d, due primarily to the impact of mild weather adversely affecting heating product sales (LPG and home heating oil).

Sales in retail markets in the rest of Europe increased by 5 kbbl/d to 77 kbbl/d, as a result of the effect of a higher market share in Germany and the purchase and lease of service stations in Germany and Spain.

ENI PRELIMINARY RESULTS FOR 2006 – 33 –

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Index

Full Year

Refining throughputs on Eni's own account for the full year were 761 kbbl/d, down 14 kbbl/d or 1.9%, from 2005, owing to lower throughputs on third party refineries (in particular Priolo). Steady refining throughputs were achieved at Eni's own refineries as a result of improved performance at the Venice refinery, partly offset by the impact of planned maintenance standstills of the Sannazzaro and Livorno refineries. The wholly-owned refineries utilization rate was 100%, reflecting balanced capacity.

For the full year, sales of refined products decreased by 10 kbbl/d to 1,023 kbbl/d, due primarily to lower sales on both the Agip branded network and wholesale markets in Italy (down 10 kbbl/d), partly offset by increased volumes sold in the rest of Europe (up 5 kbbl/d). The 26 kbbl/d lost retail sales in Italy due to the divestment of Italiana Petroli carried out in September 2005 was partially offset by Eni's ongoing supply of significant volumes of fuels and other products to the divested company under a five-year supply contract.

Sales of refined products on the Agip branded network in Italy declined by 2 kbbl/d to 173 kbbl/d, due to competitive pressure; market share decreased from 29.7% to 29.3%. Sales on wholesale markets in Italy decreased by 8 kbbl/d to 202 kbbl/d, due primarily to the decline registered in the fourth quarter as discussed above. Sales of refined products increased in both the retail and wholesale markets in the rest of Europe, principally in Germany and Spain.

Sales on the wholesale market in Italy decreased by 8 kbbl/d to 202 kbbl/d, due primarily to the decline registered in the fourth quarter, as mentioned above. Sales of refined products increased in both the retail and wholesale markets in the rest of Europe, principally in Spain and Germany.

ENI PRELIMINARY RESULTS FOR 2006 – 34 –

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Index

Petrochemicals

(million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 1,657 | | 1,740 | | 83 | | 5.0 | | Results — Net sales
from operations | 6,255 | | 6,823 | | 568 | | 9.1 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 37 | | 72 | | 35 | | 94.6 | | Operating profit | 202 | | 172 | | (30 | ) | (14.9 | ) |
| | | (4 | ) | (4 | ) | | | Exclusion
of inventory holding (gains) losses | (19 | ) | (60 | ) | (41 | ) | | |
| 37 | | 86 | | 49 | | | | Exclusion of special item | 78 | | 107 | | 29 | | | |
| | | | | | | | | of
which: | | | | | | | | |
| | | 13 | | 13 | | | | Non-recurring items | | | 13 | | 13 | | | |
| 37 | | 73 | | 36 | | | | Other
special items: | 78 | | 94 | | 16 | | | |
| 4 | | 14 | | 10 | | | | - impairments | 4 | | 19 | | 15 | | | |
| 6 | | 11 | | 5 | | | | -
environmental charges | 36 | | 31 | | (5 | ) | | |
| 17 | | | | (17 | ) | | | - provision for redundancy incentives | 17 | | | | (17 | ) | | |
| 11 | | 50 | | 39 | | | | -
provision to the reserve for contingencies | 29 | | 50 | | 21 | | | |
| (1 | ) | (2 | ) | (1 | ) | | | - other | (8 | ) | (6 | ) | 2 | | | |
| 74 | | 154 | | 80 | | 108.1 | | Adjusted
operating profit | 261 | | 219 | | (42 | ) | (16.1 | ) |
| 2 | | 1 | | (1 | ) | (50.0 | ) | Net financial income (expenses) (1) | 3 | | 2 | | (1 | ) | (33.3 | ) |
| (12 | ) | (14 | ) | (2 | ) | 16.7 | | Income
taxes (1) | (37 | ) | (47 | ) | (10 | ) | 27.0 | |
| 64 | | 141 | | 77 | | 120.3 | | Adjusted net profit | 227 | | 174 | | (53 | ) | (23.3 | ) |

(a) Excluding special items.

Result

Fourth Quarter

In the fourth quarter of 2006 adjusted operating profit was euro 154 million, up euro 80 million from the fourth quarter of 2005, or 108.1%, reflecting primarily higher product selling margins, in particular in basic petrochemicals.

Special charges excluded from the adjusted operating profit were euro 86 million in the fourth quarter, reflecting primarily asset impairments, the impact of a non recurring charge related to a fine imposed by an antitrust authority, and provisions for redundancy incentives.

Full Year

Adjusted operating profit was euro 219 million, half of the year affecting all businesses with the exception of polyethylene, due to increases in the cost of oil-based feedstocks not transferred to selling prices and to the impact of the accident occurred at the Priolo refinery in April resulting in lower product availability. These negative factors were offset in part by the positive effect of Eni's sales mix along with an improved industrial and commercial performance.

Special charges excluded from the adjusted operating profit were euro 107 million in the fourth quarter, reflecting primarily asset impairments, the impact of a non recurring charge related to a fine imposed by an antitrust authority, and provisions for risks and redundancy incentives.

ENI PRELIMINARY RESULTS FOR 2006 – 35 –

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Product availability and sales

(thousand tonnes)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

1,879 1,789 (90 ) (4.8 ) Production 7,282 7.072 (210 ) (2.9 )
1,289 1,323 34 2.6 Sales 5,376 5,264 (112 ) (2.1 )
746 781 35 4.7 Basic petrochemicals 3,022 2,881 (141 ) (4.7 )
229 226 (3 ) (1.3 ) Styrenes
and elastomers 1,003 989 (14 ) (1.4 )
314 316 2 0.6 Polyethylenes 1,351 1,394 43 3.2

Fourth Quarter

Sales of petrochemical products (1,323 ktonnes) were up 34 ktonnes, or 2.6%, from the fourth quarter of 2005. Increases concerned: (i) basic petrochemicals related to a positive trend in demand; (ii) styrenes due to higher product availability resulting from the fact that sales in the third quarter of 2005 were affected by standstills and shutdowns and operational issues at the Mantova site. These positives were offset in part by a weak performance of the elastomer business, due to a slow recovery after maintenance of the Ferrara and Ravenna sites and weak demand in the intermediate business that caused a 20.3% decline in sales.

Production (1,789 ktonnes) declined by 90 ktonnes from the fourth quarter of 2005 (or 4.8%) in the elastomer and polyethylene businesses due to the standstill of the Priolo cracker, and in the basic petrochemicals business due to the negative performance of the Gela and Dunkerque sites, compared to a positive performance at Brindisi and Porto Marghera.

Full Year

Sales of petrochemical products (5,264 ktonnes) were down 112 ktonnes, or 2.1% from 2005. Declines concerned: (i) basic petrochemicals (down 4.7%), due to lower feedstock availability, resulting from the outage of the Priolo cracker as a consequence of the accident occurred in late April at the nearby refinery; (ii) elastomers (down 2.5%) due to the slow recovery of Ferrara and Ravenna after maintenance in the first half of the year; (iii) intermediates (down 10.6%) due to weak demand. These negatives were offset in part by increased sales of polyethylene (up 3.2%) and aromatics (in particular xylenes up 4.8%) due to higher demand.

Production (7,072 ktonnes) declined by 210 ktonnes from 2005 (down 2.9%) in particular in elastomers, polyethylene and basic petrochemicals, where lower production due to the standstill of the Priolo refinery was offset in part by higher production at Porto Marghera, Sarroch and Dunkerque. Styrene production increase. In 2005 it had been damaged by outages and technical issues.

ENI PRELIMINARY RESULTS FOR 2006 – 36 –

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Index

Engineering and Construction

(million euro)

Fourth Quarter Full Year

2005 2006 Change % Ch. 2005 2006 Change % Ch.

| 1,809 | | 1,969 | | 160 | 8.8 | | Results — Net sales
from operations | 5,733 | | 6,979 | | 1,246 | | 21.7 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 135 | | 149 | | 14 | 10.4 | | Operating profit | 307 | | 505 | | 198 | | 64.5 | |
| 7 | | 3 | | (4 | ) | | Exclusion
of special item | 7 | | 3 | | (4 | ) | | |
| 142 | | 152 | | 10 | 7.0 | | Adjusted operating profit | 314 | | 508 | | 194 | | 61.8 | |
| 46 | | 47 | | 1 | 2.2 | | Net
financial income (expenses) (1) | 141 | | 66 | | (75 | ) | (53.2 | ) |
| (70 | ) | (68 | ) | 2 | (2.9 | ) | Income taxes (1) | (127 | ) | (174 | ) | (47 | ) | 37.0 | |
| 37.2 | | 34.2 | | (3.0 | ) | | Tax
rate adjusted (%) | 27.9 | | 30.3 | | 2.4 | | | |
| 118 | | 131 | | 13 | 11.0 | | Adjusted net profit | 328 | | 400 | | 72 | | 22.0 | |

(a) Excluding special items.

Result

Fourth Quarter

Adjusted operating profit for the fourth quarter of 2006 was euro 152 million, up euro 10 million from the fourth quarter of 2005. This increase was recorded in particular in the following areas: (i) Offshore drilling, due to higher tariffs for the Scarabeo 3 and Scarabeo 5 semisubmersible platforms; (ii) Onshore drilling, due to the beginning of works in the Caspian area.

Adjusted net profit of euro 131 million increased by euro 13 million from the fourth quarter of 2005 due to a better operating performance.

Full Year

Adjusted operating profit for 2006 was euro 508 million, up euro 194 million from 2005. This increase was recorded in particular in the following areas: (i) Offshore, due to higher activity in the Caspian region and Nigeria; (ii) Offshore drilling, due to higher tariffs for the Scarabeo 3 and Scarabeo 5 semisubmersible platforms and higher activity levels of the Perro Negro 5 jack-up and Scarabeo 4 semisubmersible platform; (iii) Onshore due to higher activity related essentially to the start-up of some large projects acquired in 2005.

Adjusted net profit of euro 400 million increased by euro 72 million from 2005 (up 22%) due to a better operating performance, offset in part by losses of affiliates.

ENI PRELIMINARY RESULTS FOR 2006 – 37 –

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Index

(million euro)

Full Year

2005 2006 Change % Ch.

Orders acquired (1) 8,395 11,172 2,777 33.1
Offshore 3,096 3,681 585 18.9
Onshore 4,720 4,923 203 4.3
Offshore
drilling 367 2,230 1,863 507.6
Onshore drilling 212 338 126 59.4
Eni 887 2,692 1,805 203.5
Third parties 7,508 8,480 972 12.9
Italy 858 1,050 192 22.4
Outside Italy 7,537 10,122 2,585 34.3

Dec. 31, 2005 Dec. 31, 2006 Change % Ch.

Order backlog at period end (1) 10,122 13,191 3,069 30.3
Offshore 3,721 4,283 562 15.1
Onshore 5,721 6,285 564 9.9
Offshore
drilling 382 2,247 1,865 488.2
Onshore drilling 298 376 78 26.2
Eni 695 2,602 1,907 274.4
Third parties 9,427 10,589 1,162 12.3
Italy 1,209 1,280 71 5.9
Outside Italy 8,913 11,911 2,998 33.6

(a) Includes the Bonny project for euro 28 million in order backlog.

Among the main orders acquired in the first nine months of 2006 were:

| • | an EPC contract for Saudi
Aramco for the construction of four trains for gas and
crude separation with a total capacity of 1,200 kbbl/d/d
and facilities for production within the development of
the onshore Khursaniyah field in Saudi Arabia; |
| --- | --- |
| • | a contract for the
conversion of an oil tanker into an FPSO unit with
production capacity of 60 kbbl/d and storage capacity of
1,800 kbbl/d for the development of the Gimboa field
offshore Angola at a depth of 700 meters for Sonagol
P&P; |
| • | an EPIC contract for Burullus Gas Co for
the construction of underwater systems for the
development of eight new wells within the expansion plan
of the Scarab/Saffron and Simian fields offshore the Nile
Delta; |
| • | a 16-month long contract for the use of
the semisubmersible drilling platform Scarabeo 7 in
Nigeria for ExxonMobil. |

Orders acquired amounted to euro 11,172 million, of these projects to be carried out outside Italy represented 91%, while orders from Eni companies amounted to 24% of the total. Eni's order backlog was euro 13,191 million at December 31, 2006 (euro 10,122 million at December 31, 2005). Projects to be carried out outside Italy represented 90% of the total order backlog, while orders from Eni companies amounted to 20% of the total.

ENI PRELIMINARY RESULTS FOR 2006 – 38 –

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NON-GAAP Measures

Reconciliation of reported operating profit by division and net profit to adjusted operating and net profit

Management evaluates Group and business performance on the basis of adjusted operating profit and adjusted net profit, which are arrived at by excluding inventory holding gains or losses and special items. Further, finance charges on finance debt, interest income, charges or income deriving from the fair value evaluation of derivative financial instruments held for trading purposes, and exchange rate differences are excluded when determining adjusted net profit of each business segment.

Taxation effect of such items excluded from adjusted net profit is determined based on the specific rate of taxes applicable to each item, with the exception for finance charges or income, which the Italian statutory tax rate of 33% is applied to.

Adjusted operating profit and adjusted net profit are non-GAAP financial measures under either IFRS, or U.S. GAAP. Management includes them to help facilitate comparison of base business performance across periods and to allow financial analysts to evaluate Eni’s trading performance on the basis of their forecasting models. In addition, management uses segmental adjusted net profit when calculating return on capital employed by each business segment.

The following is a description of items which are excluded from the calculation of adjusted results.

Inventory holding gain or loss is the difference between the cost of sales of the volumes sold in the period based on the cost of supplies of the same period and the cost of sales of the volumes sold in the period calculated using the weighted-average cost method of inventory accounting.

Special items include certain relevant incomes or charges pertaining to: (i) either infrequent or unusual events and transactions, being identified as non recurring items under such a circumstance; or (ii) certain events or transactions which are not considered to be representative of the ordinary course of business, as in the case of environmental provisions, restructuring charges, asset impairments or write ups and gains or losses on divestments even though they occurred in past exercises or are likely to occur in future ones. As provided for in Decision No. 15519 of July 27, 2006 of the Italian market regulator (CONSOB), non recurring material income or charges are to be clearly reported in the management’s discussion and in financial tables.

Finance charges or incomes related to net borrowings excluded from the adjusted net profit of business segments are comprised of interest charges on finance debt and interest income earned on cash and cash equivalents not related to operations. Also the effect of the fair value evaluation of derivative financial instruments held for trading purposes and exchange rate differences are excluded from the adjusted net profit of business segments. Therefore, the adjusted net profit of business segments includes finance charge or income deriving from certain segment-operated assets, i.e. interest income on certain receivable financing and securities related to operations and finance charge pertaining to the accretion of certain provisions recorded on a discounted basis (as in the case of the asset retirement obligations in the Exploration & Production segment).

For a reconciliation of adjusted operating profit and adjusted net profit to reported operating profit and net profit see tables below.

ENI PRELIMINARY RESULTS FOR 2006 – 39 –

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Index

| Fourth
Quarter 2006 |
| --- |
| (million
euro) |

Reported operating profit 3,141 1,303 (386 ) 72 149 ) (89 ) (12 ) 3,957
Exclusion
of inventory holding (gains) losses (41 ) 386 (4) 341
Exclusion of special items
of
which:
Non-recurring (income) charges (2 ) 109 13 62 182
Other
special charges: 54 9 39 73 3 82 36 296
environmental
charges 2 27 62 11 102
asset
impairments 51 13 50 1 12 127
gains on disposal
of assets (7 ) (7 )
provisions
to the reserve for contingencies 4 11 15
provision for
redundancy incentives 10 15 30 14 2 1 29 101
other (8 ) (35 ) (2 ) 7 (4 ) (42 )
Special items of operating profit 54 7 148 86 3 144 36 478
Adjusted
operating profit 3,195 1,269 148 154 152 (77 ) (53 ) (12 ) 4,776
Net financial (expense) income * (22 ) (1 ) (7 ) 87 57
Net income
from investments * (18 ) 97 31 1 47 (1 ) 1 158
Income taxes * (1,851 ) (492 ) (64 ) (14 ) (68 ) 22 9 (2,458 )
Adjusted
tax rate (%) 58.7 36.0 35.8 49.2
Adjusted net profit 1,304 873 115 141 131 (85 ) 57 (3 ) 2,533
of
which:
- net profit of minorities 178
-
adjusted net profit pertaining to Eni 2,355
Reported net profit pertaining to Eni 1,520
Exclusion
of inventory holding (gains) losses 213
Exclusion of special items: 622
-
non-recurring (income) charges 199
- other special charges 423
Adjusted
net profit pertaining to Eni 2,355
  • Excluding special items.

ENI PRELIMINARY RESULTS FOR 2006 – 40 –

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Index

| Fourth
Quarter 2005 |
| --- |
| (million
euro) |

Reported operating profit 3,561 641 329 37 135 (297 ) (41 ) 31 4,396
Exclusion
of inventory holding (gains) losses (32 ) (177 ) (209 )
Exclusion of special items
of
which:
Non-recurring (income) charges 290 290
Other
special charges: 20 (9 ) 227 37 7 205 (33 ) 454
environmental
charges 3 157 146 8 314
asset
impairments (43 ) 1 5 11 4 47 2 27
gains on disposal
of assets
provisions
to the reserve for contingencies 8 6 (4 ) (119 ) (109 )
increase insurance
charges 57 6 30 17 4 64 178
provision
for redundancy incentives 6 3 13 4 3 3 12 44
other (22 ) 14 (1 ) 9
Special
items of operating profit 20 281 227 37 7 205 (33 ) 744
Adjusted operating profit 3,581 890 379 74 142 (92 ) (74 ) 31 4,931
Net
financial (expense) income * (21 ) 13 (91 ) (99 )
Net income from investments * (10 ) 76 29 2 46 (1 ) 142
Income
taxes * (1,978 ) (339 ) (187 ) (12 ) (70 ) 2 120 (12 ) (2,476 )
Adjusted tax rate (%) 55.7 34.6 45.8 49.8
Adjusted
net profit 1,572 640 221 64 118 (90 ) (46 ) 19 2,498
of which:
- net
profit of minorities 102
- adjusted net profit pertaining to Eni 2,396
Reported
net profit pertaining to Eni 2,105
Exclusion of inventory holding (gains) losses (131 )
Exclusion
of special items: 422
- non-recurring (income) charges 290
- other
special charges 132
Adjusted net profit pertaining to Eni 2,396
  • Excluding special items.

ENI PRELIMINARY RESULTS FOR 2006 – 41 –

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Index

Full Year 2006
(million
euro)
Reported operating profit 15,580 3,802 319 172 505 ) (296 ) (133 ) 19,327
Exclusion
of inventory holding (gains) losses (67 ) 215 (60 ) 88
Exclusion of special item
of
which:
Non-recurring (income) charges 22 109 13 62 206
Other
special charges: 183 125 147 94 3 261 56 869
environmental
charges 44 111 126 11 292
asset
impairments 231 51 14 50 1 22 369
gains on disposal
of assets (61 ) (61 )
provisions
to the reserve for contingencies 8 31 75 114
provision for
redundancy incentives 13 37 47 19 2 17 43 178
other (7 ) (33 ) (6 ) 21 2 (23 )
Special items of operating profit 183 147 256 107 3 323 56 1,075
Adjusted
operating profit 15,763 3,882 790 219 508 (299 ) (240 ) (133 ) 20,490
Net financial (expense) income * (59 ) 16 (7 ) 205 155
Net income
from investments * 85 489 184 2 66 5 831
Income taxes * (8,510 ) (1,525 ) (345 ) (47 ) (174 ) 89 54 (10,458 )
Adjusted
tax rate (%) 53.9 34.8 35.4 48.7
Adjusted net profit 7,279 2,862 629 174 400 (301 ) 54 (79 ) 11,018
of
which:
- net profit of minorities 606
-
adjusted net profit pertaining to Eni 10,412
Reported net profit pertaining to Eni 9,217
Exclusion
of inventory holding (gains) losses 33
Exclusion of special items: 1,162
-
non-recurring (income) charges 218
- other special charges 944
Adjusted
net profit pertaining to Eni 10,412
  • Excluding special items.

ENI PRELIMINARY RESULTS FOR 2006 – 42 –

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Index

Full Year 2005
(million
euro)
Reported operating profit 12,592 3,321 1,857 202 307 ) (377 ) (141 ) 16,827
Exclusion
of inventory holding (gains) losses (127 ) (1,064 ) (19 ) (1,210 )
Exclusion of special items
of
which:
Non-recurring (income) charges 290 290
Other
special charges: 311 47 421 78 7 638 149 1,651
environmental
charges 31 337 413 54 835
asset
impairments 247 1 5 29 4 75 2 363
gains on disposal
of assets
provisions
to the reserve for contingencies 39 36 126 201
increase insurance
charges 57 6 30 17 4 64 178
provision
for redundancy incentives 7 8 22 4 3 6 29 79
other 1 (12 ) (8 ) 14 (5 )
Special
items of operating profit 311 337 421 78 7 638 149 1,941
Adjusted operating profit 12,903 3,531 1,214 261 314 (296 ) (228 ) (141 ) 17,558
Net
financial (expense) income * (80 ) 37 (296 ) (339 )
Net income from investments * 10 370 231 3 141 (1 ) 23 777
Income
taxes * (6,647 ) (1,386 ) (500 ) (37 ) (127 ) 359 52 (8,286 )
Adjusted tax rate (%) 51.8 35.2 34.6 46.0
Adjusted
net profit 6,186 2,552 945 227 328 (297 ) (142 ) (89 ) 9,710
of which:
- net
profit of minorities 459
- adjusted net profit pertaining to Eni 9,251
Reported
net profit pertaining to Eni 8,788
Exclusion of inventory holding (gains) losses (759 )
Exclusion
of special items: 1,122
- non-recurring (income) charges 290
- other
special charges 932
Adjusted net profit pertaining to Eni 9,251
  • Excluding special items.

ENI PRELIMINARY RESULTS FOR 2006 – 43 –

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Index

Analysis of special items

(million euro)

Fourth Quarter — 2005 2006 Full Year — 2005 2006
Special items
of
which:
290 182 Non-recurring (income) charges 290 206
454 296 Other
special charges: 1,651 869
314 102 environmental
charges 835 292
27 127 asset
impairments 363 369
(7 ) gains on disposal
of assets (61 )
69 15 provisions
to the reserve for contingencies 379 114
178 - of which:
increase insurance charges 178
44 101 provision
for redundancy incentives 79 178
(42 ) other (5 ) (23 )
744 478 Special
items of operating profit 1,941 1,075
(1 ) 5 Net financial (expense) income 27 (6 )
(4 ) 1 Net income
from investments (137 ) (72 )
of which:
gain on
the disposal of Italiana Petroli (IP) (135 )
gain on Galp Energia SGPS SA (disposal of gas
assets to Rede Electrica Nacional) (73 )
(317 ) 138 Income
taxes (609 ) 165
of which:
supplemental
tax rate UK 91
179 windfall tax
Algeria 179
2 legal
proceeding in Venezuela 77
422 622 Total special items of net profit 1,222 1,162

ENI PRELIMINARY RESULTS FOR 2006 – 44 –

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Information on bonds

Bonds maturing in the 18-month period starting on December 31, 2006

| (million
euro) | |
| --- | --- |
| Issuing
company | Amount at December 31, 2006 (1) |
| Eni Coordination Center SA | 634 |
| Eni USA
Inc | 153 |
| | 787 |

(1) Amounts in euro at December 31, 2006 include instalments with interest accrued.

Bonds issued in the 2006 (guaranteed by Eni SpA)

Issuing company Nominal amount (million) Currency Currency amount at Dec. 31, 2006 (million euro) (1) Maturity Rate %

Eni Coordination Center SA 5,000 JPY 32 2014 fixed 1.560
Eni
Coordination Center SA 45 USD 34 2013 variable
Eni Coordination Center SA 100 GBP 153 2011 fixed 5.120
219

(1) Amounts in euro at December 31, 2006 include instalments with interest accrued.

ENI PRELIMINARY RESULTS FOR 2006 – 45 –

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Accounts of the parent company

Profit and loss account

(million euro) 2005 2006 Change % Ch.

| Revenues — Net sales
from operations | 44,794 | | 52,987 | | 8,193 | | 18.3 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Other income and revenues | 231 | | 186 | | (45 | ) | (19.5 | ) |
| Total
revenues | 45,025 | | 53,173 | | 8,148 | | 18.1 | |
| Operating expenses | | | | | | | | |
| Purchases,
services and other | (39,537 | ) | (48,248 | ) | (8,711 | ) | 22.0 | |
| of which non recurring items | (290 | ) | (150 | ) | 140 | | (48.3 | ) |
| Payroll
and related costs | (780 | ) | (932 | ) | (152 | ) | 19.5 | |
| Depreciation, amortisation and impairments | (872 | ) | (829 | ) | 43 | | (4.9 | ) |
| Operating
profit | 3,836 | | 3,164 | | (672 | ) | (17.5 | ) |
| Financial income (expense) | (29 | ) | 35 | | 64 | | (220.7 | ) |
| Income
from investments | 3,606 | | 3,785 | | 179 | | 5.0 | |
| Profit before income taxes | 7,413 | | 6,984 | | (429 | ) | (5.8 | ) |
| Income
taxes | (1,371 | ) | (1,163 | ) | 208 | | (15.2 | ) |
| Net profit | 6,042 | | 5,821 | | (221 | ) | (3.7 | ) |
| Exclusion
of inventory holding (gains) losses | (672 | ) | 118 | | 790 | | (117.6 | ) |
| Replacement cost net profit | 5,370 | | 5,939 | | 569 | | 10.6 | |

Condensed balance sheet

(million euro) Dec. 31, 2005 Dec. 31, 2006 Change

| Fixed assets — Property,
plant and equipment, net | 4,954 | | 5,507 | | 553 | |
| --- | --- | --- | --- | --- | --- | --- |
| Inventories - compulsory stock | 1,766 | | 1,701 | | (65 | ) |
| Intangible
assets, net | 858 | | 948 | | 90 | |
| Investments, net | 20,805 | | 21,086 | | 281 | |
| Accounts
receivable financing and securities related to operations | 29 | | 28 | | (1 | ) |
| Net accounts payable in relation to capital
expenditure | (445 | ) | (313 | ) | 132 | |
| | 27,967 | | 28,957 | | 990 | |
| Net working capital | 95 | | (23 | ) | (118 | ) |
| Employee
termination indemnities and other benefits | (255 | ) | (308 | ) | (53 | ) |
| Capital employed, net | 27,807 | | 28,626 | | 819 | |
| Shareholders’
equity | 26,872 | | 26,935 | | 63 | |
| Net borrowings | 935 | | 1,691 | | 756 | |
| Total
liabilities and shareholders’ equity | 27,807 | | 28,626 | | 819 | |

ENI PRELIMINARY RESULTS FOR 2006 – 46 –

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