Eni shows the best results since 2012 to drive the green shift

The logo of Italian energy company Eni is seen at a gas station in Rome, Italy September 30, 2018. REUTERS/Alessandro Bianchi

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  • Eni boosted by rising oil and gas prices
  • Planning for the renewable energy and retail spin-off
  • Saipem issue darkens outlook

MILAN, Feb 18 (Reuters) – Italy’s Eni has become the latest energy group to benefit from the oil and gas boom, as it recorded its best result since 2012 to provide liquidity to cover investors’ returns and also finance its green approach.

The group rose to an adjusted net profit of 4.74 billion euros ($5.4 billion) last year from a loss of 758 million euros in 2020, as soaring energy prices have boosted its upstream business despite lower volumes.

Oil and gas production fell 3% to 1.682 million barrels of oil equivalent per day in 2021, mainly due to maintenance and lower production from its mature fields.

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“Our upstream segment has continued to generate the financial resources needed to fund our decarbonization strategy,” Eni chief executive Claudio Descalzi said on Friday.

Eni, which has committed to carbon neutrality by 2050, is due to present a new business plan in March.

Unlike some of its peers, Eni is clinging to lucrative fossil fuels to help fund its green shift while selling off assets like its Norwegian company Vaar Energi, which listed this week. Read more

The group is joining forces with BP in Angola in a joint venture and will list part of its retail and renewables unit in what could be one of Italy’s biggest IPOs this year.

“In 2021, we delivered great results and accelerated the pace of our transformation strategy,” Descalzi said.

BOUNCE

In the fourth quarter, Eni’s adjusted net profit amounted to 2.11 billion euros against 50 million euros a year ago to beat a consensus of 1.94 billion euros.

Operating cash flow before change in WCR at replacement cost jumped 192% over the period to 4.6 billion euros to enable it to cover 1.8 billion euros in investments and confirm its dividend policy.

The results reflect the industry’s rebound last year after a troubled 2020 when the coronavirus pandemic triggered a slump in energy demand and prices.

This month, larger peers like BP and Shell (SHEL.L) reported windfall profits on higher energy prices, pledging to return more cash to shareholders. Read more

Eni said it paid out 2.8 billion euros to shareholders in the form of dividends and share buybacks.

“We see the outlook for 2022…remaining positive for the E&P sector, mainly thanks to a strong oil price scenario,” said Italian broker IMI.

One cloud on the horizon is a potential capital call for struggling energy services group Saipem, in which Eni owns around 30%.

As of 0852 GMT, Eni shares were up 1.1% while the European oil index (.SXEP) was up 0.3%. ($1 = 0.8793 euros)

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Reporting by Stephen Jewkes; edited by Agnieszka Flak and Keith Weir

Our standards: The Thomson Reuters Trust Principles.

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