E

Business Context and Reporting Period

Company: Eni S.p.A.
Filing Type: Form 6-K (Interim Consolidated Report)
Reporting Period: First half of 2021 (ended June 30, 2021)
Submission Date: August 31, 2021

Eni is an integrated energy company focused on a just energy transition. The reporting period reflects a strong recovery in the energy sector driven by the rebound in global economic activity following the COVID-19 pandemic, resulting in significantly higher commodity prices compared to the prior year.

Key Financial Metrics

Material Changes vs. Prior Period

• Commodity Prices: Brent crude oil averaged $65/bbl (up from $40/bbl in H1 2020). European natural gas spot prices more than doubled. Chemical spreads reached record highs.
• Segment Performance:
  • Exploration & Production (E&P): Adjusted EBIT surged to €3.2 billion (up €3 billion) due to better pricing and lower expenses, despite a 6% production decline due to maintenance.
  • Chemicals: Reported its best-ever result with €241 million EBIT, driven by improved margins and production availability.
  • Refining & Marketing (R&M): Reported a loss of €171 million (vs. profit of €220 million in H1 2020) due to historic lows in refining margins (SERM of -$0.5/bbl) and higher emission allowance costs.
  • Global Gas & LNG: Reported a loss of €6 million (vs. profit of €363 million) due to narrowing spreads between Italian and continental gas hubs.
• Production: Hydrocarbon production averaged 1.65 million boe/d, down 6% year-over-year, primarily due to scheduled maintenance in Norway, Italy, and the UK, and lower activity in Nigeria.
• Renewables: Installed capacity reached 331 MW (up 8% from year-end 2020). The company expects to reach 2 GW of installed or under-construction capacity by year-end.

Guidance, Outlook, and Shareholder Remuneration

• Shareholder Remuneration: Based on a Brent reference scenario of $65/bbl, the Board approved:
  • An annual dividend of €0.86 per share for fiscal year 2021 (more than 100% increase from 2020).
  • An interim dividend of €0.43 per share to be paid in September 2021.
  • A share buy-back program of €400 million.
• 2021 Outlook:
  • Cash flow from operations expected to exceed €10 billion.
  • Hydrocarbon production reaffirmed at approximately 1.7 million boe/d.
  • Renewable capacity expected to reach 1.2 GW installed by year-end.
  • Organic leverage expected to be lower than 0.3 by year-end.
• Risks: Key risks include volatility in hydrocarbon prices, geopolitical instability in operating regions (Libya, Nigeria, Venezuela), climate-related regulations, and the potential for stranded assets due to the energy transition.

Investor Verification Checklist

• Refining Margins: Verify the sustainability of the negative SERM (-$0.5/bbl) and the impact of rising carbon emission allowance costs on the R&M segment.
• Production Volumes: Confirm the timeline for the return of production volumes to pre-maintenance levels in Norway, Italy, and the UK.
• Renewable Targets: Monitor progress toward the revised 2021 target of 1.2 GW installed renewable capacity and the 2 GW under construction.
• Geopolitical Exposure: Assess the status of receivables and operations in high-risk jurisdictions, specifically Venezuela (Cardón IV JV) and Nigeria (OML 17 divestment and OPL 245 arbitration).
• Capital Allocation: Track the execution of the €400 million share buy-back program and the timing of the interim dividend payment.