Eni S.p.A. (E) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 28, 2023 8:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen, and welcome to Eni's 2023 First Half Results Conference Call, hosted by Mr. Claudio Descalzi, Chief Executive Officer. [Operator Instructions]

I now hand you over to your host to begin today's conference. Thank you.

Claudio Descalzi

Thank you. Welcome to the second quarter and first half 2023 results conference call. In the first half of 2023 in the quarter, Eni has delivered excellent operating and financial results, with significant steps forward in progressing the execution of strategy across all the businesses showing strong financial resilience.

In 2023, we outperformed in term of both underlying EBIT and CFFO versus expectation. And even as a scenario has weakened, we have been able to fund our CapEx, begin our shareholder buyback alongside paying our quarterly dividend and complete Algeria M&A and biorefinery purchase in the U.S.

In this quarter, we have agreed the purchase of the remaining 64% of Novamont, a leading player in circular and sustainable bioplastic aligned with our strategy for Versalis. Closing of the deal -- of this deal is expected before the year end, following antitrust authorizations.

Our acquisition of Neptune Energy announced in June had a portfolio of complementary high-quality and crucially low-emission assets that contribute towards our shift to gas. The deal is immediately accretive and has significant synergies of at least €500 million with further upside. It also adds a materiality to our integrated GGP activities and it is a major step in ensuring long-term supply to our European gas customers.

Completion of the deal is planned for the first quarter of 2024. Our agreement to buy additional interest in Indonesia from Chevron announced this week deepens our position in the region. Further, synergically supporting our targeted growth in LNG in the Asia Pacific region. At the same time, we continue to rebalance our portfolio, simplifying the business and optimize our capital. We completed the sale of a minority stake in the Transmed pipeline in January and announced the sale of mature production in Congo with additional transitions in the coming months.

During the transition, it is critical to be fast in delivering and efficient in spending. These elements are part of our strategic approach that already have had fundamental impact over the past decade. For instance, in natural resources, we have shifted the E&P toward a focus on time to market and the efficient use of capital through our dual exploration model and fast-track development. The shift in profitability of GGP became evident in late 2021, as we leverage our upstream equity position.