Eni 2023 First Quarter Results - Delivering on Performance and Strategy
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Eni reported its 1Q 2023 results, delivering on performance and strategy: - Production was up over 2% quarter-over-quarter to 1.66 million barrels of oil equivalent per day. - EBIT was €4.6 billion and net profit was €2.9 billion, resisting price impacts through profit improvement. - Cash flow from operations was €5.3 billion with excellent underlying cash conversion. - Leverage remained low at 14% providing financial strength and flexibility.
Eni 2023 First Quarter Results - Delivering on Performance and Strategy
- 1. ENI 1Q 2023 RESULTS Delivering on Performance and Strategy APRIL 28, 2023 Sail Away of Firenze FPSO to Côte d'Ivoire from Dubai
- 2. DISCLAIMER 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 forward- looking 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.
- 3. 3 DISCOVERED RESOURCES: Around 200 Mboe, mainly from new discoveries in Cyprus, Mexico and Egypt E&P: Production up >2% q/q; major gas development in Libya; sail away of FPSO for Baleine, Côte d'Ivoire CCS: Significant step forward in the development of the Hynet NW CCS Project with receipt of grant from UK government PORTFOLIO: Closing of bp’s Algerian business acquisition and stake sale of Algeria-Italy gas pipeline to Snam NATURAL RESOURCES SUSTAINABLE MOBILITY: Company incorporation; 50% purchase of St. Bernard Biorefinery, enhanced supply of 100% HVO PLENITUDE: Inaugurated 263 MW PV plant in the US; renewable pipeline expansion in Italy and UK CHEMICALS: Announced Versalis’ acquisition of Novamont ENERGY EVOLUTION EBIT: € 4.6 BLN, resilient E&P, strong GGP, Energy Evolution meeting expectations NET PROFIT: € 2.9 BLN, resisting price impact by delivering quarter-on-quarter profit improvement CFFO: € 5.3 BLN, excellent underlying cash conversion CAPEX: € 2.2 BLN, maintaining capital discipline LEVERAGE: 14%, historically low providing strength and flexibility FINANCIALS EBIT and Net are adjusted. Cash Flows are adjusted pre-working capital at replacement cost. Leverage: before IFRS 16 lease liabilities. 1Q 2023 | HIGHLIGHTS
- 4. € BLN EBIT is adjusted. E&P: resilient profitability in a weaker scenario GGP: record quarterly EBIT on gas and LNG optimization 1Q 2023 | EARNINGS OVERVIEW CONFIRMING EXCELLENT 1Q 2023 RESULTS ON TRACK ON KEY METRICS GGP EBIT €1.37 BLN Downstream EBIT pro forma € 0.31 BLN Sustainable Mobility EBITDA € 0.20 BLN Plenitude EBITDA pro forma € 0.23 BLN CONTRIBUTIONS FROM ACROSS ALL MAJOR BUSINESSES IMPROVED QUALITY AND SCALE OF GGP PROFITABILITY EVIDENT DOWNSTREAM UNDERLYING PERFORMANCE IN LINE WITH OUTLOOK RESILIENT DELIVERY FROM UPSTREAM R&M: continuing capturing cycle VERSALIS: challenged by lower demand PLENITUDE: delivering growth trajectory 4 E&P E&P GGP R&M Versalis Plenitude & Power Corporate & Others Ebit Net Fin Expense Associates Taxes & Other Net Income 2.79 1.37 0.26 0.19 -0.11 0.14 4.64 -0.12 0.46 -2.06 2.91
- 5. 4Q22 Adjusted Pre-tax Scenario Volumes & Efficiency GGP Scenario Turnaround Other Growth & Performance Associates Other 1Q23 Adjusted Pre-tax 5 NATURAL RESOURCES DOWNSTREAM PLENITUDE POWER 1Q 2023 vs 4Q 2022 EARNINGS RESISTING SCENARIO HEADWINDS TO DELIVER BUSINESS PERFORMANCE PRODUCTION REGULARITY AND COST DISCIPLINE RE-SHAPED GGP IN CHANGED CONTEXT CAPTURES UPSIDES CONTINUED PROGRESS IN ENERGY EVOLUTION NET INCOME: UP 17%, MORE THAN RESISTING PRICES SCENARIO LOWER PRICES (BRENT -8%, PSV -40%) UNFAVORABLE FX IMPACT HIGH DEGREE OF VOLATILITY -0.6 0.5 1.3 -0.3 0.2 0.1 ~0 -0.4 -0.1 ROACE: 21% (1Y ROLLING) 5 € BLN 4.4 5.0 RESILIENT ADNOC, VAR AND AZULE DESPITE SCENARIO
- 6. 2.9 5.3 Net Adj. DD&A adj. Other adj. CFFO ex. WC @RC Working Capital Organic Capex Distribution Others FREE CASH FLOW 6 DISTRIBUTION AND STRATEGIC FLEXIBILITY 1Q 2023 | FINANCIAL STRENGTH PERFORMANCE AND FINANCIAL DISCIPLINE SIGNIFICANT CASH GENERATION EXCELLENT CASH CONVERSION, CFFO COVERS CAPEX AND REMUNERATION SEASONAL WORKING CAPITAL REQUIREMENTS TO REVERSE DISCIPLINED INVESTMENT OPTIMIZED CAPEX LEVEL WITH NO IMPACT ON BUSINESS BALANCED PORTFOLIO ACTIVITY ADDING NEW ASSETS OFFSET BY PORTFOLIO RATIONALISATION EFFICIENT BALANCE SHEET RETAINS FLEXIBILITY AND RESILIENCE FY CFFO >16 BLN DESPITE SCENARIO UNDERLYING PERFORMANCE LEVERAGE AT 14% WITHIN 10-20% RANGE LIQUIDITY > € 19 BLN HIGH LEVEL OF LIQUIDITY € BLN Net Debt Change -0.8 INCLUDES BP’S ALGERIAN BUSINESS ACQUISITION AND STAKE DISPOSAL OF PIPELINE TO SNAM SEASONAL WC AND OTHER SHORT- TERM CASH TIMING DIFFERENCES Net Portfolio
- 7. DELIVERY ON STRATEGY DELIVERY ON PERFORMANCE FAST TIME TO MARKET: Important near-field exploration success in 1Q; Baleine confirmed 2023 start-up (less than 2 years from discovery) SHIFTING TO GAS: Progressing production and portfolio mix towards 60% target at 2030 BUILDING BIO-REFINING SCALE: Agreed St. Bernard Biorefinery investment with start up in 1H 2023 TRANSFORMING CHEMICALS: Built leading bioplastic position through Versalis’ acquisition of Novamont ENHANCED AND SIMPLIFIED DISTRIBUTION: Seeking approval for up to €3.5bn from AGM in May with confirmed €2.2bn programme anticipated to start shortly after DELIVERY ON STRATEGY PRODUCTION: 1.66 Mboed (up >2% vs 4Q 2022), consistent with FY23 guidance (1.63-1.67 Mboed) GGP EBIT: Confirmed strong EBIT outlook, highlights upside potential on base case R&M: Results consistent with FY guidance in seasonally weaker quarter EBIT: Improving vs FY guidance in constant scenario CASHFLOW: Excellent financial performance and cash conversion LEVERAGE: 14% consistent with plan guided range, one of the lowest in recent years 7 1Q 2023 | DELIVERY ACHIEVING OUR TARGETS
- 8. EBIT PRODUCTION GGP EBIT PLENITUDE EBITDA1 DIVIDEND SUST. MOBILITY EBITDA1 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. 3 Additional potential for lower capex from continued optimization efforts and flexibility. Updated 2023 Scenario is: Brent 85 $/bbl (unchanged), SERM 8 $/bbl (from 7 $/bbl), PSV 529 €/kmc (from 970 €/kmc) and average EUR/USD exchange rate: 1.08 (from 1.03) CFFO2 DISCOVERED RESOURCES BUYBACK 2023 GUIDANCE € 12 BLN 1.63-1.67 MBOED € 2 – 2.2 BLN > € 0.7 BLN € 0.94/SHARE > € 16 BLN 700 MBOE € 2.2 BLN GUIDANCE > € 0.9 BLN 8 CAPEX ~ € 9.2 BLN3 DOWNSTREAM EBIT1 € 1 – 1.1 BLN adjusted for scenario and FX adjusted for scenario and FX adjusted for FX adjusted for FX FOCUSING ON DELIVERY GROWING BUSINESSES GENERATING CASH DISCIPLINED CAPEX SHAREHOLDER DISTRIBUTION A PRIORITY first interim payment in September
- 9. ANNEX St. Bernard Bioefinery in Chalmette, LA
- 10. 1Q22 Adjusted Pre-tax Scenario Angola decons. E&P Performance GGP Performance Scenario Performance Scenario Performance & Growth Others 1Q23 Adjusted Pre-tax 10 1Q 2023 vs 1Q 2022 EARNINGS RESISTING SCENARIO HEADWINDS TO DELIVER UPSTREAM HOLDING PRODUCTION AFTER CHALLENGES FACED IN 2022 GGP DELIVERING IMPROVEMENTS IN CONTEXT OF ABSENT RUSSIAN GAS SCENARIO AND PERFORMANCE POSITIVE POINTS TO STRUCTURAL STEP-UP IN DOWNSTREAM PROFITABILITY PLENITUDE DELIVERING GROWTH DESPITE VOLATILE MARKETS ADJ PROFIT PRE-TAX: NEARLY FLAT DESPITE FALL IN PRICES -1.0 -0.5 0.2 -0.1 0.1 0.7 0.2 SHARES IN ISSUE: 5.5% LOWER YEAR-ON-YEAR 10 € BLN 0.1 0.1 5.2 5.0 NATURAL RESOURCES DOWNSTREAM PLENITUDE POWER INCLUDES CONTRIBUTION FROM ASSOCIATES, FINANCING AND OTHERS
- 11. MARKET SCENARIO 11 BRENT| $/bbl EXCHANGE RATE| €/$ PSV| €/kcm STANDARD ENI REFINING MARGIN| $/bbl 101.4 88.7 81.3 1Q 2022 4Q 2022 1Q 2023 1.122 1.021 1.073 1Q 2022 4Q 2022 1Q 2023 1,043 1,009 606 1Q 2022 4Q 2022 1Q 2023 -0.9 13.6 11.2 1Q 2022 4Q 2022 1Q 2023
- 12. 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 $/€) -0.49 -0.28 -0.63 Brent sensitivity applies to liquids and oil-linked gas. Sensitivity is valid for limited price variation. For energy use purposes PSV variation of 1$/MMBTU has an impact of -15 mln € on SERM calculation. 12