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Eni Investor Presentation 2023
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Investor Presentation
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Eni 1H 2023 Results Financial Delivery and Strategic Progression
JULY 28, 2023
This document contains forward-looking statements regarding future events and the future results of Eni that are based on current expectations, estimates, forecasts, and projections about the industries in which Eni operates and the beliefs and assumptions of the management of Eni. In addition, Eni's management may make forwardlooking statements orally to analysts, investors, representatives of the media and others. In particular, among other statements, certain statements with regard to management objectives, trends in results of operations, margins, costs, return on capital, risk management and competition are forward looking in nature. Words such as 'expects', 'anticipates', 'targets', 'goals', 'projects', 'intends', 'plans', 'believes', 'seeks', 'estimates', variations of such words, and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. Therefore, Eni's actual results may differ materially and adversely from those expressed or implied in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in Eni's Annual Reports on Form 20-F filed with the U.S. Securities and Exchange Commission (the "SEC") under the section entitled "Risk factors" and in other sections. These factors include but are not limited to:
- Fluctuations in the prices of crude oil, natural gas, oil products and chemicals;
- Strong competition worldwide to supply energy to the industrial, commercial and residential energy markets;
- Safety, security, environmental and other operational risks, and the costs and risks associated with the requirement to comply with related regulation, including regulation on GHG emissions;
- Risks associated with the exploration and production of oil and natural gas, including the risk that exploration efforts may be unsuccessful and the operational risks associated with development projects;
- Uncertainties in the estimates of natural gas reserves;
- The time and expense required to develop reserves;
- Material disruptions arising from political, social and economic instability, particularly in light of the areas in which Eni operates;
- Risks associated with the trading environment, competition, and demand and supply dynamics in the natural gas market, including the impact under Eni take-or-pay long-term gas supply contracts;
- Laws and regulations related to climate change;
- Risks related to legal proceedings and compliance with anti-corruption legislation;
- Risks arising from potential future acquisitions; and
- Exposure to exchange rate, interest rate and credit risks.
Any forward-looking statements made by or on behalf of Eni speak only as of the date they are made. Eni does not undertake to update forward-looking statements to reflect any changes in Eni's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any further disclosures Eni may make in documents it files with or furnishes to the SEC and Consob.
DELIVERY ON STRATEGY
1H 2023 SIGNIFICANT STRATEGIC PROGRESS
A LONGER TERM PERSPECTIVE ON OUR PATH
OUR LEGACY
OUR PRESENT OUR FUTURE
RE-SHAPED EQUITY DRIVEN SOURCED MODEL LNG PORTOFLIO GROWTH FOCUS ON VALUE TOWARDS A GLOBAL LEADER IN RELIABLE AND SECURE GAS AND LNG SUPPLY MULTIPLE PLATFORMS HIGH GROWTH SAF & HVO UNIQUE INTEGRATION ON FEEDSTOCKS FIRST MOVER IN BIOREFINING DEEP TECHNOLOGY AND KNOW-HOW DEVELOPED SUSTAINABLE MOBILITY LAUNCH RESHAPING BUSINESS THROUGH DEVELPOMENT OF INNOVATIVE PROCESSES AND TECHNOLOGIES FULLY SUSTAINABLE AND DIFFERENTIATED COMPANY FOCUSSING ON CIRCULARITY AND BIOCHEMICALS BUILD OUT RENEWABLES AND E-MOBILITY BUSINESS LEVERAGE CUSTOMER BASE ADRESS CUSTOMER EMISSIONS ACCELERATING FURTHER GROWTH AND CRYSTALLIZING VALUE THROUGH PLENITUDE MARKET VALORIZATION VERSALIS GGP SUSTAINABLE MOBILITY FOCUS ON TIME TO MARKET REDUCED PROJECTS BREAKEVEN DUAL EXPLORATION MODEL & PHASED DEVELOPMENT BALANCE RETURN AND RISKS WITH SHIFT TO GAS IMPROVED RISK-RETURN PROFILE 60% GAS WEIGHTED PORTFOLIO AT 2030 CCS AT SCALE TO TACKLE UNABATED EMISSIONS E&P UPSTREAM G&P R&M AND CHEMICALS
HIGH PERFORMANCE COMPUTING CAPABILITIES ENI-NEXT VENTURES TECH LED BUSINESS GROWTH
PERFORMANCE IMPROVEMENT IN EXISTING BUSINESS BREAKTHROUGH TECHNOLOGIES E.G. FUSION
MORE RESILIENT, PROFITABLE COMPANY
FINANCIAL IMPROVEMENT OVER THE LAST DECADE
ATTRACTIVE GROWING CASHFLOW FROM STREAMLINED BUSINESS AT CONSTANT PRICES
FOCUS ON ALLOCATION AND CAPITAL PRODUCTIVITY YIELDS HIGHER ROACE AT CONSTANT PRICES
HALVED LEVEL OF LEVERAGE ADDS TO RESILIENCE AND CAPACITY TO SEIZE OPPORTUNITY
UNDERPINNED ORGANICALLY FUNDED DISTRIBUTION TO THE HIGHEST LEVEL FOR THE COMPANY
DIVIDEND GROWS AS A FUNCTION OF PERFORMANCE IMPROVEMENT AND SHARES IN ISSUE
1H 2023 | GROUP RESULTS
CONFIRMING OUR FINANCIAL STRENGTH
EBIT and Net Profit are adjusted. Cash Flows are adjusted pre-working capital at replacement cost. Leverage: before IFRS 16 lease liabilities.
NATURAL RESOURCES
OUTPERFORMING SCENARIO
E&P
ADJ. EARNINGS PRE-TAX | € BLN
PRODUCTION 1.61 MBOED IN 2Q +2% YOY DRIVEN BY RAMP-UP IN MOZAMBIQUE, MEXICO AND RECOVERED PRODUCTION IN KAZAKHSTAN
CONTINUOUS FOCUS ON COST MANAGEMENT
7 7
GGP
ADJ. EARNINGS PRE-TAX | € BLN
DELIVERING ON SUPPLY PORTFOLIO RELOAD
POSITIVE CONTRIBUTION FROM OPTIMIZATION AND TRADING
WEAKER SCENARIO
LOWER PRICES BRENT -31%, PSV -62%
E&P
EBIT €2.1 BLN RESILIENT IN CONTEXT OF SCENARIO & HIGHER NON-CASH EXPLORATION EXPENSES
GGP
BUSINESS RESILIENT TO ABSOLUTE GAS PRICE FALL
BENEFITS FROM CONTRACTUAL TRIGGERS, RENEGOTIATIONS AND SETTLEMENTS
1H EBIT € 2.5 BLN YTD EXCEEDING ORIGINAL GUIDANCE
2023 GGP GUIDANCE RAISED TO € 2.7-3.0 BLN
DOWNSTREAM
CHALLENGED BY MACRO
ADJ. EBIT PRO FORMA | € BLN
SUSTAINABLE MOBILITY
EBITDA €0.27 BLN
SCENARIO SERM 6.6 \$/BBL DOWN 62% vs 2Q 2022
GTR&M
REFINING SERM IMPACTED BY LOWER CRACKS & OTHER MARKET DEVELOPMENTS NOT CAPTURED BY SERM PLUS LOWER UTILISATION DUE TO TURNAROUNDS
RESILIENT MARKETING
STRONG CONTRIBUTION FROM ADNOC
CLOSING OF ST. BERNARD BIOREFINERY TRANSACTION
CHEMICAL PERSISTING MARGIN COMPRESSION
NOVAMONT ACQUISITION AGREEMENT FINALISED*
*subject to the customary conditions
PLENITUDE
INTEGRATED BUSINESS MODEL DELIVERING VALUE
ADJ. EBITDA PRO FORMA | € BLN END OF 1H23 DATA
RENEWABLES
2.5 GW INSTALLED CAPACITY
RETAIL
10 M CUSTOMERS
E-MOBILITY
17 k OWNED PUBLIC EV CPs
ON TRACK VS FY23 GUIDANCE
GROWING INSTALLED CAPACITY IN RES AND E-MOBILITY
STRATEGIC AGREEMENTS IN 1H:
- OFFSHORE WIND: SIMPLY BLUE AND GREENIT
- INTERNATIONAL RETAIL: KRAKEN
- E-MOBILITY: BMW AND IKEA
STRONG FINANCIAL PERFORMANCE DRIVEN BY BUSINESS INTEGRATION AND RETAIL
2Q 2023 RESULTS SUMMARY
PRE-TAX TO CASHFLOW AND NET DEBT
HIGH LEVEL OF CASH CONVERSION
POSITIVE WORKING CAPITAL RELEASE AS SEASONAL EFFECTS REVERSE
CFFO MORE THAN COVERS CAPEX AND DISTRIBUTION
FUNDING OF BUYBACK, PORTFOLIO & WINDFALL TAX
NET DEBT € 8.2 BLN CONFIRMS A STRONG BALANCE SHEET WITH HISTORICAL LOW LEVEL OF LEVERAGE AT 15%
Change
CONCLUDING REMARKS
DELIVERING FINANCIAL RESULTS IN A WEAKER SCENARIO
SIGNIFICANT STEPS IN PROGRESSING STRATEGY
CONSITENCY OF PURPOSE
ADVANCING VALUE OF BUSINESS AND DELIVERING ATTRACTIVE SHAREHOLDER RETURN
ANNEX
12
2023 GUIDANCE
| PRODUCTION | 1.63-1.67 MBOED | 1.63 Mboed in 3Q23 |
|---|---|---|
| DISCOVERED RESOURCES | 700 MBOE | |
| GGP EBIT | € 2.7-3.0 BLN | |
| PLENITUDE EBITDA1 | ~ € 0.8 BLN | |
| DOWNSTREAM EBIT1 | € 0.8 BLN | reflecting market conditions not captured by SERM |
| SUST. MOBILITY EBITDA1 | > € 0.9 BLN | |
| EBIT | € 12 BLN | underlying improvement of ~€2B |
| CFFO2 | € 15.5-16 BLN | underlying improvement of €1-1.5B |
| CAPEX | < € 9.0 BLN | |
| DIVIDEND | € 0.94/SHARE | first interim payment in September |
| BUYBACK | € 2.2 BLN | commenced in Q2 with €0.4B in May/June |
| LEVERAGE | 10%-20% |
GUIDANCE
SIGNIFICANT PROGRESS IN MEETING AND BEATING GUIDANCE EVEN AS SCENARIO SOFTER
FY EBIT AND CFFO REFLECTS NORMALISING GGP
1 Plenitude and Sustainable Mobility: EBITDA is pro-forma; Downstream: EBIT is pro-forma.
2 Cash Flows are adjusted pre working capital at replacement cost and exclude effects of derivatives.
Updated 2023 Scenario is: Brent 80 \$/bbl (from \$85/bbl); SERM \$8/bbl (unchanged); PSV 484 €/kmc (from €529/kmc); and average EUR/USD exchange rate of 1.08 (unchanged)
2Q 2023 EARNINGS SUMMARY
EBIT TO PRE-TAX RECONCILIATION
€ BLN
RESISTING SCENARIO HEADWINDS TO DELIVER
DIVERSITY IN CONTRIBUTION
RESILIENT DELIVERY FROM
GGP CONFIRMS QUALITY AND PERFORMANCE OF BUSINESS
EMERGENCE OF PLENITUDE
SATELLITES AND ASSOCIATES INCREASINGLY IMPORTANT CONTRIBUTORS IN EARNINGS AND AS DIVIDEND PAYERS
2Q 2023 vs 2Q 2022 EARNINGS
2Q 2023 vs 1Q 2023 EARNINGS
NATURAL
EARNINGS PRIMARILY IMPACTED BY FALL IN NATURAL GAS PRICES AND SEASONAL TRENDS BETWEEN 1Q AND 2Q
DOWNSTREAM PLENITUDE
€ BLN
2Q MARKET SCENARIO
BRENT| \$/bbl EXCHANGE RATE| €/\$
PSV| €/kcm STANDARD ENI REFINING MARGIN| \$/bbl
UPSTREAM KEY START-UPS IN THE PLAN [1/2]
| COUNTRY | PROJECT | OPERATOR | W.I. | PRODUCTS | FID | START UP | PRODUCTION (KBOED)A |
|---|---|---|---|---|---|---|---|
| ANGOLA (Azule Energy) |
Agogo West Hub Integrated |
J | 18% | Liquids | 2022 | 2026 (FPSO) | 175 (100%) |
| NGC Quiluma & Mabuqueiro |
J | 19% | Gas | 2021 | 2026 | 100 (100%) | |
| CONGO | Congo LNG | Y | 65% | Gas | 2022 | 2023 | 123 (100%) |
| EGYPT | Melehia ph.2 | Y | 76% | Liquids/Gas | 2022 | 2024 (Gas Plant) |
37 (100%, Oil&Gas) |
| Merakes East |
Y | 65% | Gas | 2023 | 2025 | 15 (100%) | |
| INDONESIA | Maha | Y | 40% | Gas | 2024 | 2026 | 34 (100%) |
| ITALY | Cassiopea | Y | 60% | Gas | 2018 | 2024 | 27 (100%) |
a Average yearly production in peak year/at plateau Operatorship legend: Y (yes), N (no), J (joint) 18
UPSTREAM KEY START-UPS IN THE PLAN [2/2]
| COUNTRY | PROJECT | OPERATOR | W.I. | PRODUCTS | FID | START UP | PRODUCTION (KBOED)A |
|---|---|---|---|---|---|---|---|
| IVORY COAST | Baleine ph.1 |
Y | 83% | Liquids/Gas | 2022 | 2023 | 18 (100%) |
| Baleine ph.2 |
Y | 83% | Liquids/Gas | 2022 | 2024 | 38 (100%) | |
| LIBYA | A&E Structure | Y | 50% | Gas | 2023 | 2026 (Struct. A) |
160 (100%) |
| Balder X | N | 58% | Liquids | 2019 | Q3 2024 | >70 (100%)b | |
| NORWAY (Var Energi) |
Breidablikk | N | 22% | Liquids | 2020 | 2024 | ~62 (100%)c |
| Johan Castberg | N | 19% | Liquids | 2017 | 2024 | ~190 (100%)c | |
| UAE | Dalma Gas | N | 25% | Gas | 2019 | 2025 | 56 (100%) |
a Average yearly production in peak year/at plateau
b Source: Var Energi Q1 2022 results (total Balder field production)
c Source: IPO prospect 19
Operatorship legend: Y (yes), N (no), J (joint)
BIOREFINING KEY PROJECTS 2023-26
| COUNTRY | PROJECT | W.I. | START UP | CAPACITY | STATUS | ADDITIONAL NOTES | |
|---|---|---|---|---|---|---|---|
| ITALY (VENICE) |
Production capacity increase from 360 to 560 kt/y |
2024 | |||||
| Enhanced flexibility to allow other biomass processing (incl. low bio ILUC) |
100% | Ph1 in 2023 Ph2 in 2027 |
560 kton/y |
Firm | - | ||
| ITALY (VENICE & GELA) |
Product mix enrichment to grow HVO diesel & biojet production |
100% | 2024-2025 | ~740 kton/y (Gela) |
Firm | - | |
| ITALY (LIVORNO) |
Building 3 new plants for hydrogenated biofuel production |
100% | 2025 | 500 Kton/y |
Firm | Biogenic feedstock pre treatment unit, 500 kton/y ecofining™ plant and hydrogen plant |
|
| MALAYSIA (PENGERANG) |
New biorefinery under study (flexible configuration to max SAF & HVO prod.) |
Under eval. |
FID by 2023, completion by 2025 |
650 kton/y (gross) |
Under study |
Strategic location (easy access to growing Asian markets) |
|
| USA CHALMETTE |
New biorefinery conversion (expanding presence in North America) |
50% | H1 2023 | 550 kton/y (equity) |
Firm | Access to premium HVO and SAF market and ample bio feedstock availability |
PLENITUDE KEY PROJECTS
| COUNTRY | PROJECT | WORKING INTEREST |
EQUITY INSTALLED CAPACITY (MW) |
TECHNOLOGY | COMPLETION | YEARLY PRODUCTION (GWH) |
|---|---|---|---|---|---|---|
| SPAIN | Guillena & Caparacena |
100% | 380 | 2024 | 800 | |
| USA | Brazoria | 100% | 263 | 2022 | 450 | |
| USA | Guajillo | 100% | 200 | B | 2024 | 150 |
| SPAIN | Orense | 100% | 100 | 2024 | 210 | |
| FRANCE | Samoussy | 100% | 90 | 2022 | 90 | |
| GREECE | Toumba | 100% | 80 | 2024 | 130 | |
| ITALY | Borgia, Corleone & Salandra |
100% | 65 | 2023-2024 | 100 | |
| KAZAKHSTAN | Shaulder | 100% | 50 | 2023 | 90 | |
| ITALY | Montalto & Castelvetrano |
60% | 65 | 2024 | 110 | |
| UK | Dogger Bank (A, B, C) |
13% | 470 | 2023-2026 | 2.100 |
Storage: BESS production refers to annual energy dispatched.
21
Completion represents the final construction stage excluding the grid connection, meaning that all principal components have been installed. Pre-commissioning activities fall within the construction phase.
| SENSITIVITY 2023 | ||
|---|---|---|
| ------------------ | -- | -- |
| SENSITIVITY 2023 | EBIT ADJ (€ bln) |
Net adj (€ bln) |
CFFO before WC (€ bln) |
|---|---|---|---|
| Brent (1 \$/bbl) |
0.18 | 0.13 | 0.13 |
| European Gas Spot Upstream (1 \$/mmbtu) | 0.15 | 0.12 | 0.13 |
| Std. Eni Refining Margin (1 \$/bbl) | 0.14 | 0.10 | 0.14 |
| Exchange rate \$/€ (+0.05 \$/€) |
-0.47 | -0.26 | -0.58 |
