Eni S.p.a. · MIL:ENI

Eni — Investor Day (March 2013)

46 slides from Eni's investor day presentation, Mar 14, 2013

  1. Slide 1: 2013-2016 Strategy

    2013-2016 Strategy 14 March 2013 eni.com

  2. Slide 2: The new eni: ideally positioned to deliver growth and returns

    the new eni: ideally positioned to deliver growth and returns Exceptional growth opportunities e&p  production to reach ~2.5m boe/d by 2022  returns supported by low costs of new giant projects Positioning business for sustainable profitability g&p  aligning supply with European hub pricing  foc

  3. Slide 3: The new eni: more e&p...

    the new eni: more e&p... % capital employed in E&P E&P capital employed by region 61% 54% 48% Others FSU N Africa Sub-Saharan OECD + Far East 2011 2012 2016 2012 2016 increasing exposure to managing risk through higher-returns activities diversification 3

  4. Slide 4: ... a business with a transformed opportunity set...

    ... a business with a transformed opportunity set... Exploration performance bln boe ~7.5 8 2008-2012: extraordinary 7 exploration success Mozambique 6  discovered over twice the 5 barrels produced 4 3.2  excluding Mozambique track 3 record of ca. 1bln/yr 2  revolutionised resource base 1 0  tim

  5. Slide 5: ... converted into superior, organic production growth...

    ... converted into superior, organic production growth... Production growth 2012-2016: >4% production CAGR Kboe/d CAGR high visibility and deliverability: >3%  90% of production post-FID by YE >4% 2013 1,701  80% from conventional projects, onshore and shallow water 2016-2022: >3% production CAGR

  6. Slide 6: ..with robust returns

    ..with robust returns New production to 2016 costs Well-positioned on the cost $/boe curve  industry-leading exploration Royalties and taxes costs  contained development costs <30$/boe  focus on synergic giant projects Opex  onshore/shallow water exposure  key position in Africa Capex resilient

  7. Slide 7: g&p: demand and pricing put pressure on margins

    g&p: demand and pricing put pressure on margins Deteriorating market environment 2012 EBITDA proforma adj EU 27 bln € € per demand 1000m3 (bcm) 1.3 LNG -550 Retail 300 - Semi Regulated & International transport Wholesale and powergen Normalization for one offs 0- -450 2008 2009 2010 2011 2012 2013 P

  8. Slide 8: g&p strategy: positioning for sustainable profitability

    g&p strategy: positioning for sustainable profitability EBITDA proforma adj. 2016 bln €  stable  increase  supply  leverage trading earnings number of renegotiation integration clients to  added value  synergies with 14m commercial e&p development ~1.5 products Semi Retail and Wholesale, LNG T

  9. Slide 9: r&m: continuous improvement

    r&m: continuous improvement EBIT adj  On track with 2012-2015 bln € efficiency and enhancement Efficiency and optimisation programme:  2012-2015 target: €550m  2012 achievement: ~€150m 2016 of repeatable efficiencies 2011 2012  New target >€500m of ebit enhancement to 2016  €400m from completio

  10. Slide 10: versalis: more aggressive turnaround plan

    versalis: more aggressive turnaround plan EBIT adj. at constant scenario bln € Further rationalisation and integration EBIT (including pro- forma JVs)  Reduction of ethylene exposure, also through the reconversion of critical sites  Energy, logistics and break personnel savings even Refocusing to

  11. Slide 11: Exploration & Production

    Exploration & Production Claudio Descalzi eni.com

  12. Slide 12: main actions

    main actions  sustainability and continuous improvement of HSE Leverage distinctive approach  access to energy, health and education Convert efficiently  accelerating conversion resources into production  focus on rapid time-to-market Deliver on development  strong growth targets project pipeli

  13. Slide 13: the eni model

    the eni model Operational Results Sustainability TRIR* Zero flaring target 1,82 Mscm/d 30 60 0,91 15 30 2007-11 2012 0 0 2007 2008 2009 2010 2011 2012 flared gas (Mscm/d) Zero blow-outs flared gas/total production (toe/ktoe) 293 307 320 eni model of sustainability:  access to energy: power projects

  14. Slide 14: transformed resource base...

    transformed resource base... Total resources bln boe 2012 - P3 & Contingent +7,5% +9% 34.5 32.1 29.5 +35% +25% onshore North Africa & ME SS Africa 2008 2011 2012 shallow water Russia & Central Far East & 2P P3 & Contingent Risked exp Asia Pacific deepwater Europe America arctic brent 56 111 111 ($/b

  15. Slide 15: ... efficiently converted into reserves and production

    ... efficiently converted into reserves and production Reserve Replacement Time-To-Market*  Major 2013-2014 FIDs  15/06 East Hub - Angola  Yaro-Yakhinskoye - Russia  Urengoyskoye ph.2 - Russia  Jangkrik Complex - Indonesia  Mamba initial developments – Mozambique  Skrugard / Havis - Norway 

  16. Slide 16: strong growth targets

    strong growth targets Production growth cagr Kboe/d >3% >4% 2012 2016 2022 producing fields new projects 2013/2016 2022 Brent ($/boe) 90 +2%/year 16

  17. Slide 17: our development pipeline: diversified and synergic…

    our development pipeline: diversified and synergic… 2013-2014 2015-2016 Beyond 2016  ALNG  15/06 East Hub  Litchendjili  Mozambique  OPL 245 ph.2 Sub-Saharan  Abo ph.3  OPL 245 ph.1  Mafumeira Sul  Brass LNG  Congo – Nené  15/06 West Hub  Kizomba sat. ph.2  Sankofa Norway Barents  Goli

  18. Slide 18: … leading to a balanced and robust profile

    … leading to a balanced and robust profile Production by region Production by type Production by operator equity equity equity production production production 2012 2016 2022 2012 2016 2022 2012 2016 2022 SS Africa North Africa & ME onshore operated Europe Russia/Caspian Area shallow water non opera

  19. Slide 19: key growth drivers to 2016

    key growth drivers to 2016 Start-ups 2013-14 start up project country op equity production at 2016 physical progress MLE Algeria  15 ~100% Kashagan EP Kazakhstan  60 99,9%** ALNG Angola 25 96% CAFC Gas Algeria  5 ~180 2013 >90% kboe/d El Merk Algeria 15 >90% Abo ph 3 Nigeria  10 >80% Jasmine UK

  20. Slide 20: key 2013 start-ups: development on track

    key 2013 start-ups: development on track Algeria  MLE started in January, ramping up together with CAFC early gas  El Merk started up in March Kashagan ep  onshore plant: commissioned with sweet gas and fuel  A-island: ready for production by march  D-island: achieved mechanical completion of t

  21. Slide 21: Kashagan EP – Bolashak onshore facilities

    Kashagan EP – Bolashak onshore facilities 21

  22. Slide 22: key 2014 start-ups: development on track

    key 2014 start-ups: development on track Yamal developments  Urengoyskoye ph.1:  drilling activities progressing  ongoing construction of facilities  Yaro Yakhinskoye:  2 drilling rigs in operation  civil works for drilling pad ongoing Goliat  progress 54%  drilling activities progressing in

  23. Slide 23: key 2014 start-ups: development on track

    key 2014 start-ups: development on track Angola 15/06 west hub  drilling to start in June 2013  FPSO is expected to arrive in Angola in early 2014  fabrication of christmas trees in progress Venezuela  Junin 5 EP  achieved start up of anticipated early production  Perla EP  awarded contract f

  24. Slide 24: further growth drivers to 2016

    further growth drivers to 2016 Start-ups 2015-16 Project Country Op FID ~ equity production at 2016 CAFC Oil Algeria   10 Litchendjili Gas Congo   10 Asgard Mikkel Norway  10 Mafumeira Sul Angola   10 Kizomba Sat. Ph.2 Angola  10 Urengoskoye Ph.2 Russia  2013 25 150 kboe/d Jangkrik Complex

  25. Slide 25: long-term growth drivers: Mozambique

    long-term growth drivers: Mozambique Area 1 Area 4 Exploration programme  8 wells drilled so far Mamba N-1  75 Tcf GIIP discovered  27 Tcf fully contained in area 4 Mamba NE-2 Mamba NE-1  2013 drilling program  1 appraisal + 1 exploration wells Mamba S-1 Mamba S-2 Development programme 10 km 

  26. Slide 26: long-term growth drivers: Barents Sea and Indonesia

    long-term growth drivers: Barents Sea and Indonesia Barents Sea & Norway  high potential oil hub in OECD  skrugard-havis  single development project, leveraging synergies to maximize value  500 Mboe recoverable resources (100%)  start up within 2018  ~200 kboed equity production at 2022 Indone

  27. Slide 27: assets for future exploration

    assets for future exploration New acreage 2012 Arctic Russian black Sea  Norwegian & Russian Barents Sea China Unconventional Cyprus  Sichuan Basin  Levantine Basin GoM North Africa  Egypt  Tunisia Russia & Barents West Africa  Pre-salt play Far East  Nearfield East Africa Pacific Gas East Af

  28. Slide 28: investment plan

    investment plan Exploration bln € +5.5% 47.2 44.8 1,8 frontier 1,7 5,5 proven basins 5,5 Near field 39,9 Development 37,6 Production optimization Projects with production within 2016 Projects with production beyond 2016 2012-15 2013-16 dev exp other 28

  29. Slide 29: increasing efficiency

    increasing efficiency Opex F&D $/boe $/boe 12 50 10 40 8 7.9 30 6 6.8 6.4 5.8 20 4 10 2 0 0 08-10 09-11 10-12 13-16E 05-07 06-08 07-09 08-10 09-11 10-12 13-16E Benchmark group** eni Discovery cost Development cost F&D cost ** XOM, CVX, COP, BP, RDS, TOT, eni. Company data and Wood Mackenzie 29

  30. Slide 30: robust returns

    robust returns Unit cashflows +15% excluding scenario effects cashflows  Increasing proportion of oil vs gas  Limited increase of unit cash costs on planning horizon IRR around 20% on new projects at 90$/bbl  Contained unit capex through giant synergic developments project  Quick payback through

  31. Slide 31: main actions

    main actions Leverage distinctive approach  Continuous improvement in HSE Efficiently convert  RRR of >130% resources into production  Rapid time to market of new discoveries Deliver on development  >4% CAGR to 2016 project pipeline  >3% CAGR to 2022 Pursue further upside from  1bn boe a year

  32. Slide 32: Gas & Power

    Gas & Power Marco Alverà eni.com

  33. Slide 33: the deteriorating near-term environment…

    the deteriorating near-term environment… Declining Italian pricing €/kcm  Italian hub prices rapidly 70 converging with European 60 hubs 50  Deteriorating commercial PSV Premium to TTF environment 40 2013 PSV Contract  Power demand down Differential 30 20 TTF – PSV Transport Cost 10 Increased mar

  34. Slide 34: … requires an accelerated supply response

    … requires an accelerated supply response Long term gas supply Targets bcm Equity & Other >80%  Price Level Libya Statoil  ~100% hub level – transport costs GasTerra Sonatrach  Increased flexibility  Take or pay volumes Gazprom Supply aligning supply prices with hubs minus costs 34

  35. Slide 35: … and integration and innovation in wholesale, trading and lng

    … and integration and innovation in wholesale, trading and lng Industrials & Asset backed LNG Wholesale trading & power  Multi-country offers  Leverage on the  Expertise in proposed to smaller volatility of gas, oil innovative offering clients and power prices structure 2016 PROFORMA EBITDA  Fle

  36. Slide 36: further upside from market recovery

    further upside from market recovery Gas market recovery Impact  Solid and reliable counterparty  Portfolio flexibility and trading capability  Innovative product offering for industry  Production decline  Increased value of  Access to pipe, storage and LNG flexibility  Nuclear and old power i

  37. Slide 37: Financial Strategy

    Financial Strategy Massimo Mondazzi eni.com

  38. Slide 38: consolidated financial structure

    consolidated financial structure Leverage 0,5 0,4 0,3 0,2 target range 0,1 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016  Target leverage range 10-30%  Coherent with new business profile  Stronger liquidity position: ca. 2 years of financial independence Leverage = Net Debt / Equity 38

  39. Slide 39: growth strategy fuelled by broadly stable investments…

    growth strategy fuelled by broadly stable investments… Mainly: Investments  e&c +0.4 focused on E&P bln €  chemicals +0.4  g&p - 0.2  r&m - 0.4 0.5 56.8 1.1 1.4 53.8 E&P Mainly:  Mozambique  Indonesia E&P: more than 83% of  Nigeria capex plan…. E&P 2012-15 forex effect e&p others 2013-16 … an

  40. Slide 40: ...selective and focused on high-return opportunities...

    ...selective and focused on high-return opportunities... G&P R&M Chemicals 1.2 bln € 2.4 bln € 2 bln € Marketing Stay in Market business Power Efficiency New initiatives Semi-regulated Refining and international transport  G&P: selective plan - power upgrades; stable transport & distribution busine

  41. Slide 41: capex more than fully funded by strong cashflow growth

    capex more than fully funded by strong cashflow growth 2013-16 Cash Flow  Robust organic Sensitivity Cash Flow @110$/bbl cash flow FCF upside  Disposal plan >€10bn FCF @ 90  Snam $/bbl  Galp  Other assets  Further upside from price scenario CFFO disposals Avg capex Strong free cash flow 41

  42. Slide 42: Closing remarks

    Closing remarks Paolo Scaroni eni.com

  43. Slide 43: shareholder distribution policy

    shareholder distribution policy 2010-2012 policy Dividend rising in line with OECD inflation The new eni New policy 1 2 Progressive dividend New buyback programme 43

  44. Slide 44: shareholder distribution policy

    shareholder distribution policy 1 A progressive dividend policy Based on:  The board’s view of Eni’s underlying growth and value creation prospects 2013 dividend  E&P production levels increased to €1.10  G&P contract negotiations per share  Downstream refocusing, efficiency (~2% vs 2012)  Our

  45. Slide 45: shareholder distribution policy

    shareholder distribution policy 2 A flexible buyback programme Activated when, on a through-cycle basis:  Leverage is satisfactory, and in any €6 bln overall case well within our 30% ceiling authorisation  Growth opportunities in the business are funded  Dividend payments are covered flexible ups

  46. Slide 46: the new eni: ideally positioned to deliver growth and returns

    the new eni: ideally positioned to deliver growth and returns Exceptional growth opportunities e&p  production to reach ~2.5m boe/d by 2022  returns supported by low costs of new giant projects Positioning business for sustainable profitability g&p  aligning supply with European hub pricing  foc

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