Eni Capital Markets Update 2024
Eni's Capital Markets Day 2024 delivered an upgrade to oil and gas, pushing its peak production year from FY26 to FY30, and trading off higher shareholder distributions (30-35% of cash flow) for lower group capex over FY24-27.
Low carbon fuels targets have increased (renewables, EV charge points, power, SAF) supported by increased capex rising from €1.6bn pa to €1.9bn pa.
Our view:
We continue to see a disconnect between Eni’s emissions targets, which are the most ambitious of European peers, scope 1 & 2 (estimated -70% by FY30), and scope 3 (-35% by FY30) and its increasing growth of fossil fuels.
Even with its low carbon ambitions these targets will be difficult to achieve without reliance on divestments or offsets. Investors should ask Eni to quantify the impact on emissions reduction from these levers. Eni has not yet disclosed FY23 emissions performance.
Key takeaways:
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Eni has increased guidance for oil and gas, peaking at ~1.9 Mboe/d by FY30, compared to ~1.86 Mboe/d by FY26. As a result oil and gas growth between FY23-30 is expected to be around 15% (prior 12%).
In addition to the above, it intends to continue divestment of fossil fuels, divesting an estimated ~0.3 Mboe/d by FY30.
Guidance for oil and gas is now 3-4% CAGR (before divestments) and ~2% CAGR (post divestments) to FY27.
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Eni appears to be scaling back group capex and increasing divestments to boost shareholder distributions. The company has cut its capex by €2 bn to €35 bn over its FY24-27 four-year plan, to €8.75 bn pa. This will reduce to €27 bn or €6.75 bn pa post income from €8 bn of net divestments, which is 20% lower than the prior four year period.
Eni plans to distribute ~30-35% of cash flow to shareholders via dividends and buybacks, an increase from the previous ~25-30%.
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Eni upgraded its four year (FY24-27) organic capex guidance for its green value chain (Plenitude + Enilive) to €1.9bn pa from €1.6bn pa (FY23-26). This includes ~€0.5bn pa for Enilive, of which 60% will be for biorefining and 40% for marketing, and ~€1.4bn p.a for Plenitude, with 70% for renewables. As with the 4Q23 results, no capex disclosure was provided for Enilive, making it difficult to assess progress. Plenitude FY23 capex was ~€637m.
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Plenitude
In Renewables, Eni released a new target for FY27 targeting over 8 GW in capacity, adding to its 4GW target for FY24 and 7 GW target for FY26. FY23 capacity was 3 GW and pipeline now exceeds 20 GW.
New targets were introduced for E-mobility. EV charge points are expected to grow from 19,000 in FY23 to 24,000 by FY24, 40,000 by FY27, 50,000 by FY30 (prior 35,000). Eni expects its E-mobility segment to become EBITDA positive by FY25.
In Retail, the company aims to increase power customers by 2 m while reducing gas customers by 0.6 m by FY27.
Enilive
Eni reaffirmed its goal to exceed 5 Mtpa of bio-capacity by FY30. However, its target to surpass 3 Mtpa by FY25 appears to have been delayed to FY26.
Included in the above is Eni’s goal to reach 1 Mtpa SAF capacity by FY26 (brought forward from FY30) and 2 Mtpa by FY30.
