E

ENI S.p.A. Interim Consolidated Report Summary (H1 2022)

Business Context and Reporting Period

This Form 6-K filing presents the Interim Consolidated Report for ENI S.p.A. for the period ended June 30, 2022, filed on August 31, 2022. The reporting period was characterized by a significant strengthening in commodity prices driven by global demand recovery and geopolitical tensions related to Russia's military aggression in Ukraine. Brent crude oil averaged $108/barrel (up 66% vs. H1 2021), and European gas prices increased fivefold. The Group continued its strategy of diversifying gas supplies to Europe and accelerating the transition to renewable energy.

Key Financial Metrics

Material Changes vs. Prior Period

• Exploration & Production (E&P): Adjusted EBIT surged to €9.25 billion (+187%) driven by higher realized prices (liquids +64%, gas +109%) and cost discipline. Production averaged 1.62 million boe/d, slightly down due to force majeure in Kazakhstan, Libya, and Nigeria.
• Refining & Marketing (R&M): Turned a loss of €171 million in H1 2021 into a profit of €1 billion. This was driven by exceptional refining margins (SERM of $8.2/bbl vs. -$0.5/bbl) and higher utilization rates.
• Global Gas & LNG Portfolio (GGP): Adjusted EBIT improved to €917 million from a break-even position, benefiting from higher gas prices and portfolio optimization.
• Chemicals: Adjusted EBIT declined to €10 million (from €241 million) due to rising feedstock costs and higher utility expenses indexed to natural gas prices.
• Plenitude & Power: Adjusted EBIT remained stable at €251 million, supported by renewable volume ramp-ups and higher wholesale prices.
• Balance Sheet: Net borrowings decreased by €1.1 billion compared to year-end 2021, supported by strong organic free cash flow.

Guidance, Outlook, and Risks

• Updated 2022 Guidance:
  • Brent Price Assumption: Revised to $105/bbl (from $80/bbl).
  • Adjusted Cash Flow: Expected at €20 billion (up from €16 billion guidance).
  • Organic Capex: Expected at €8.3 billion.
  • Dividends: Annual dividend expected at €0.88 per share.
  • Share Buy-back: Commitment raised to €2.4 billion (up from €1.1 billion).
• Strategic Initiatives:
  • Secured alternative gas supply agreements (Algeria, Egypt, Congo) to replace 100% of Russian gas volumes to Italy by 2025.
  • Entered Qatar's North Field East LNG project.
  • Renewable installed capacity reached 1.6 GW (up 33% from Dec 2021).
• Risks and Contingencies:
  • Geopolitical Risk: Continued uncertainty regarding the war in Ukraine, potential sanctions, and supply disruptions from Russia.
  • Windfall Taxes: Accrued €546 million for the Italian windfall tax and expects a €230 million charge for the UK Energy Profits Levy.
  • Commodity Volatility: Extreme price volatility in gas and oil markets impacting margins and counterparty credit risk.
  • Operational Risks: Force majeure events in Libya, Nigeria, and Kazakhstan affecting production volumes.

Key Facts for Investor Verification

• Windfall Tax Impact: Verify the final liability and payment schedule for the Italian windfall tax (Law 51/2022) and the UK Energy Profits Levy, which significantly impacted the effective tax rate.
• Gas Supply Diversification: Monitor the execution of new supply agreements with Algeria, Egypt, and Congo to ensure the target of replacing Russian gas volumes to Italy by 2025 is met.
• Refining Margin Sustainability: Assess whether the exceptional SERM of $8.2/bbl is sustainable in H2 2022, as margins have shown signs of compression in July.
• Share Buy-back Execution: Track the progress of the €2.4 billion share buy-back program, of which €400 million had been executed by July 29, 2022.
• Renewable Growth: Verify the commissioning of the Coral Sul FLNG in Mozambique and the expansion of renewable capacity to meet the >2 GW year-end target.