Eni SpA Form 20-F Summary
Business context and reporting period
Eni SpA is an Italian integrated energy company operating across exploration and production, gas and LNG, refining and chemicals, retail energy, power generation, renewables, biofuels, e-mobility, carbon capture and related services. This Form 20-F is an annual report for the fiscal year ended December 31, 2023, prepared under IFRS as issued by the IASB. The filing does not provide a separate Q4 2023 financial statement; the requested 2023 Q4 period is therefore addressed through full-year 2023 information and disclosed subsequent events.
Key financial metrics
| Metric | 2023 | 2022 | Change or comment |
|---|---|---|---|
| Sales from operations | €93.717 billion | €132.512 billion | Down 29.3%, mainly from lower commodity prices and gas volumes |
| Operating profit | €8.257 billion | €17.510 billion | Down approximately 53% |
| Adjusted operating profit | €13.805 billion | €20.386 billion | Down approximately 32% |
| Net profit attributable to Eni | €4.771 billion | €13.887 billion | Down approximately 66% |
| Adjusted net profit | €8.322 billion | €13.301 billion | Down approximately 37% |
| Net cash from operating activities | €15.119 billion | €17.460 billion | Down approximately 13% |
| Capital expenditures | €9.215 billion | €8.056 billion | Up approximately 14% |
| Finance debt, excluding lease liabilities | €28.729 billion | €26.917 billion | Higher by €1.812 billion |
| Lease liabilities | €5.336 billion | €4.951 billion | Higher by €385 million |
| Net borrowings, excluding lease liabilities | €10.899 billion | €7.026 billion | Higher by €3.873 billion |
| Leverage, excluding lease liabilities | 0.20 | 0.13 | Within the stated medium-term target range of 0.15–0.25 |
| Cash and cash equivalents | €10.205 billion | €10.181 billion | Broadly stable |
| Total liquidity reserve | Approximately €26.9 billion | Not clearly stated on the same basis | €17.8 billion of cash and liquid securities plus €9.1 billion of committed facilities |
| Dividend per share | €0.94 | €0.88 | Up approximately 7% |
Reported profit included approximately €3.551 billion of after-tax inventory holding losses and identified net gains and losses. Principal identified items included approximately €1.0 billion of E&P impairments, €0.4 billion of chemical-plant impairments, €0.4 billion of refining write-downs, €0.65 billion of environmental and remediation provisions, €1.3 billion of commodity-derivative losses and approximately €0.7 billion related to gas inventory valuation timing. These were partly offset by an approximately €0.8 billion gain associated with the SeaCorridor transaction.
Operating performance and material changes
- Exploration & Production: operating profit was €8.549 billion versus €15.963 billion in 2022. Production increased 3% to 1.529 million barrels of oil equivalent per day, while lower oil and gas prices, currency effects and the 2022 loss of consolidation of Angolan assets reduced earnings. Proved reserves declined 3% to 6.414 billion barrels of oil equivalent.
- Global Gas & LNG Portfolio: reported operating profit was €2.431 billion versus €3.730 billion. Adjusted operating profit increased to €3.247 billion, supported by contract renegotiations, arbitration settlement and portfolio optimization, despite lower prices, volumes and trading opportunities. Worldwide gas sales declined 16.5% to 50.51 billion cubic meters.
- Enilive, Refining and Chemicals: reported an operating loss of €1.397 billion versus a €460 million profit. Adjusted operating profit was €555 million, including €728 million from Enilive and refining and a €614 million chemical-business loss. Chemicals revenue declined to €4.236 billion from €6.215 billion, reflecting weaker demand, lower prices and European cost disadvantages.
- Plenitude & Power: reported an operating loss of €464 million versus a €825 million loss. Adjusted operating profit increased to €681 million. Renewable installed capacity rose to approximately 3.0 GW from 2.2 GW, and the business had approximately 19,000 electric-vehicle charging points.
- Cash allocation: operating cash flow funded capital expenditures and acquisitions but was below shareholder distributions. Eni paid approximately €3.046 billion of dividends and spent €1.803 billion on share repurchases during 2023.
- Reserves and production: total proved reserves were 6.414 billion barrels of oil equivalent, including 2.419 billion barrels of proved undeveloped reserves. The proved reserves replacement ratio was 67% on an all-sources basis and 69% organically.
Guidance, outlook, risks and unusual items
- For 2024, management assumes Brent crude oil at approximately $80 per barrel, European natural gas prices around $10 per million British thermal units, SERM refining margins of approximately $8 per barrel and capital expenditures of approximately €9 billion. Management expects hydrocarbon production to grow approximately 3%, but expects 2024 operating results and cash flow to be lower than in 2023.
- The 2024–2027 plan contemplates approximately €35 billion of capital expenditures, approximately €8 billion of net asset disposals, approximately €1.8 billion of cost savings and leverage remaining near the 0.15–0.25 target range before IFRS 16 effects.
- Planned 2024 shareholder remuneration includes a dividend of €1.00 per share and a new buyback of at least €1.1 billion, potentially increasing to €3.5 billion subject to shareholder approval and performance. The filing targets more than €6.5 billion of buybacks over the next four years under management’s scenario.
- Eni expects continued weakness in European gas markets and reduced GGP margin opportunities. Russian gas purchases were reduced materially to approximately 12% of total purchases in 2023 from 28% in 2022, and the plan assumes no Russian gas purchases, although contracts with Gazprom remain valid.
- Key risks include crude oil and natural gas price volatility, refining and petrochemical cyclicality, foreign-exchange movements, geopolitical instability in countries such as Libya, Egypt, Nigeria and Venezuela, sanctions and supply-chain disruption, take-or-pay and ship-or-pay obligations, counterparty credit risk, environmental liabilities, climate litigation, energy-transition costs, stranded-asset risk, project delays, cost overruns and cybersecurity incidents.
- Significant subsequent events included completion of the approximately €2 billion Neptune Energy acquisition in January 2024 and the March 2024 investment by Energy Infrastructure Partners in Plenitude through a €0.6 billion capital increase for a 7.6% interest.
- At December 31, 2023, Eni disclosed €150.677 billion of undiscounted purchase obligations, including €145.260 billion under take-or-pay gas contracts and €2.747 billion under ship-or-pay contracts. Decommissioning and environmental obligations were estimated at €14.006 billion and €3.619 billion, respectively, on an undiscounted basis.
- The company disclosed €17.660 billion of guarantees, including €9.294 billion issued for joint ventures and associates. A guarantee related to Cardón IV in Venezuela could expose Eni to a maximum financial exposure of approximately €11.4 billion, although management states this does not represent the expected loss.
Most important facts for an investor to verify
- Reconcile reported versus adjusted earnings, particularly the treatment of impairments, environmental provisions, inventory valuation and commodity derivatives.
- Assess sensitivity of cash flow and leverage to Brent, European gas prices, refining margins and the EUR/USD exchange rate; management estimates operating cash flow changes of approximately €130 million for each $1 per barrel change in Brent and approximately €130 million for each $1 per million British thermal units change in European gas prices.
- Review the sustainability and execution of the €35 billion investment program, €8 billion disposal plan and €1.8 billion cost-saving program.
- Evaluate whether proved-reserve replacement, production growth and the conversion of proved undeveloped reserves support the stated upstream strategy.
- Review the full debt maturity profile, take-or-pay commitments, guarantees, supplier-finance arrangements and liquidity available during periods of commodity-market stress.
- Monitor credit collection from Egyptian, Nigerian and Venezuelan counterparties, including disclosed overdue receivables and related allowances.
- Assess the profitability and capital requirements of Plenitude, Enilive, renewables, biofuels, chemicals and carbon-capture businesses relative to the legacy oil and gas portfolio.
- Review pending environmental, climate, tax and other legal proceedings, recognizing that some potential losses are not reliably estimable and therefore may not be fully provisioned.