Eni Announce 2016-2019 Strategic Plan
Claudio Descalzi, Eni’s CEO, presented the Company’s 2016-2019 Strategic Plan to the financial community.
• Profitable growth – CEO Descalzi:
“Our industry is facing a very complex challenge: reducing costs to fulfil short term constraints while enhancing long term value. Thanks to our successful strategy of restructuring and transforming Eni into an integrated oil and gas company, we are well positioned to meet this challenge through a competitive cost structure, an efficient operating model and a flexible asset portfolio. We have started a new cycle of profitable growth and have the potential to extract more value in the future”.
Production CAGR > 3% per year, cumulative +13% by 2019
Upstream CAPEX -18% vs previous plan
Group CAPEX -21% at €37 bln, OPEX steadily below $7/bbl throughout the plan
Exploration: 1.6 bln boe of new resources at a unit exploration cost of $2.3 during the plan period
New projects average breakeven: drastically reduced from $45/boe to $27/boe average
• Restructuring – CEO Descalzi: “We are continuing to restructure our Mid-Downstream businesses successfully. Gas & Power will benefit from the renegotiation of long-term contracts and reductions in logistics costs. In Refining & Marketing, we are focused on lowering our breakeven while enhancing the efficiency of our operations and defending our retail market share”.
G&P in structural breakeven from 2017
Refining: lowering breakeven to around $3/bbl in 2018 with existing capacity
• Transformation – CEO Descalzi: “In 2015, we achieved 90% of the previous 4-year plan disposal target. We have now increased our 4-year target and will dispose of another 7 billion euros of assets by 2019, mainly through the dilution of our stakes in recent and material discoveries as part of our dual exploration model strategy”.
New disposals target: €7 bln by 2019
• Financials – CEO Descalzi: “We will continue to deliver strong cash generation through sustainable growth in the upstream, the completion of restructuring across the Group’s other businesses, cost efficiency and flexible portfolio management. Thanks to our financial flexibility, our shareholder remuneration policy continues to be sustainable even in a lower-than-expected oil price environment”.
€3.5 bln of cost reductions from renegotiations, reducing the gap between costs and oil prices
Cumulative G&A savings: €2.5 bln by 2019, vs. €2 bln in previous plan
Cash Flow From Operations
to cover CAPEX at $50/bbl Brent in 2016 vs $63/bbl in the previous plan;
to cover CAPEX and dividend at $60/bbl in 2017 vs <$75/bbl in the previous plan to cover CAPEX and dividend at <$60/bbl in 2018-2019
- Shareholder remuneration
Confirmed 2016 dividend proposal of €0.8 per share full cash
Eni is completing its transformation, crucial in such a complex oil price environment, in order to enhance long-term growth while meeting short-term financial constraints. This process will provide cumulative production growth of 13% over the plan period, despite an 18% reduction in Upstream CAPEX, positive and resilient EBIT across the Group’s other businesses, strong cash generation and proceeds with the execution of a new disposal programme of €7 bln by 2019.
Another crucial aspect of Eni’s operating model is the outstanding result in terms of safety and environment, which remain among the company’s top priorities.
In Safety, Eni was the best performer in the industry for the last three years, with a Total Recordable Injury Rate of 0.7 in 2014, compared with a peer average of 1.24. In 2015 this was further reduced by 37% reaching a TRIR of 0.45. For 2016 and beyond we target a zero level of injuries.
In the period 2010-2014, Eni reduced greenhouse gasses (GHG) by 27% from 59 MtCO2 per year to 43 MtCO2. In the upstream sector, Eni reached a level of unitary emission of 0.2 tCO2 per ton of oil equivalent produced, and for the future Eni is planning to further improve these levels, targeting a 43% reduction of unitary emissions by 2025.
Taking into account the Group’s transformation process and the targets set out in the plan, Eni intends to confirm a 2016 dividend of €0.8/share full cash. The distribution policy will be progressive based on underlying earnings growth and the macro environment.
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