E

Business Context and Reporting Period

This Form 6-K filing by Eni S.p.A. reports unaudited financial and operational results for the second quarter (IIQ) and first half (IH) of 2017, compared to the same periods in 2016. The report covers the period ending June 30, 2017, with a press release dated July 28, 2017. Eni operates across Exploration & Production (E&P), Gas & Power (G&P), and Refining, Marketing, and Chemicals (R&M and Chemicals) segments.

Key Financial Metrics

Material Changes vs. Prior Period

• Profitability Surge: Adjusted operating profit increased fivefold in IIQ 2017 and nearly fourfold in IH 2017 compared to 2016, driven by higher Brent crude prices (up 9% in IIQ, 30% in IH), production growth, and improved margins in downstream businesses.
• Segment Performance:
  • E&P: Adjusted operating profit more than doubled in IIQ 2017 (€845m) and increased fivefold in IH 2017 (€2.26b). Production grew 3.3% in IIQ 2017, excluding price effects and OPEC cuts.
  • G&P: Adjusted operating loss narrowed by 36% in IIQ 2017 due to contract renegotiations; IH 2017 profit tripled to €192m.
  • R&M and Chemicals: Adjusted operating profit nearly quadrupled in IIQ 2017 (€352m). The Chemicals business achieved a record adjusted operating profit of €187m in IIQ 2017.
• Cash Flow: Net cash flow from operations rose 56% in IIQ 2017 and 50% in IH 2017. Free cash flow for IH 2017 was €700m.
• Debt: Net borrowings increased to €15.47b at June 30, 2017, from €14.78b at year-end 2016, primarily due to unfavorable foreign currency translation and dividend payments, though management expects a year-over-year decrease following asset disposals.

Guidance, Outlook, and Management Commentary

• Production Targets: Eni confirmed its 2017 production target of 1.84 million boe/d (up 5% from 2016), leveraging new start-ups in Angola, Ghana, and Indonesia, and the Zohr project start-up expected by year-end.
• Exploration: Confirmed a 2017 target of 0.8 billion boe of new resources at a unitary discovery cost of ~$1/bbl.
• Capital Expenditure: Confirmed a target of an 18% reduction in capex year-over-year on a pro-forma basis.
• Cash Neutrality: Management confirmed organic coverage of capex and dividends at a Brent price of approximately $60/bbl in 2017.
• Dividend: CEO Claudio Descalzi proposed an interim dividend of €0.40 per share to be paid in September 2017.
• Disposals: Disposals agreed in IH 2017 totaled €2.9 billion, representing ~60% of the minimum target for the 2017-2020 period.
• Risks: Forward-looking statements are subject to risks including timing of new fields, operational issues, commodity price volatility, and geopolitical stability.

Key Facts for Investor Verification

• Interim Dividend Proposal: Verify the Board's approval of the €0.40 per share interim dividend scheduled for September 14, 2017.
• Zohr Project Status: Confirm the timeline for the Zohr project start-up (expected end of 2017) and the impact of the 10% stake sale to BP on cash flow and capex reimbursement.
• Val d'Agri Operations: Verify the resumption of operations at the Val d'Agri Oil Center following HSE remediation and its contribution to production volumes.
• Pro-Forma Capex: Review the definition of pro-forma capex (€4.27b for IH 2017) which excludes reimbursable costs from asset disposals and partner advances.
• Chemicals Performance: Validate the record EBIT performance in the Chemicals segment (€310m for IH 2017) and the sustainability of margins given expected declines in cracker and polyethylene margins.