ENI S.p.A. · MIL:ENI
ENI — FY2008 Earnings Presentation
61 slides from ENI's earnings presentation, Feb 13, 2009
Slide 1: 2008 Results and Strategy Presentation
2008 Results and Strategy Presentation London, 13th February 2009
Slide 2: 2008: A Very Good Year
2008: A Very Good Year ` E&P – Superior production growth: 1,797 kboe/d, +5.6% net of PSA effect ` G&P – High cash generation: € 1.9 bln free cash flow ` R&M – Italian market share: +140bp to 30.6% ` Adjusted net profit up 7.7% Industry-leading dividend yield 2008 total dividend at € 1.30 per share
Slide 3: Regulated Business Restructuring
Regulated Business Restructuring Market Market 50% 40% ~50% ~40% 10% share SRG ~5% shares SRG buy back buy back 100% Italgas 100% 100% 100% Italgas Stogit Stogit Unlock significant value for Eni’s shareholders 3
Slide 4: Preliminary Results 2008
Preliminary Results 2008 Alessandro Bernini, CFO
Slide 5: Regulated Business Restructuring: Transaction Terms
Regulated Business Restructuring: Transaction Terms ` Sale of 100% of Italgas and Stogit to Snam Rete Gas ` Total consideration: €4.7 billion, in line with RAB ` Paid in cash through capital increase up to €3.5 billion and new debt up to € 1.3 billion ` Eni’s commitment to subscribe its share of cap
Slide 6: Market Environment
Market Environment Average European Brent €/$ Exchange Rate Refining Margin* $/bl €/bl $/bl €/bl 1.6 120 120 8 8 110 110 7 7 100 100 6 6 1.5 90 90 5 5 80 80 4 4 70 70 3 3 1.4 60 60 50 50 2 2 40 40 1 1 1.3 Q407 Q108 Q208 Q308 Q408 Q407 Q108 Q208 Q308 Q408 Q407 Q108 Q208 Q308 Q408 Δ% Δ% Δ% Q4 08/Q4 07
Slide 7: Consolidated Results
Consolidated Results Million € Reported Adjusted* Net profit -11.8% +7.7% 10,011 8,825 10,201 3,010 2,678 9,470 1,943 9,699 -27.4% 7,001 6,792 8,258 (874) 2007 2008 2007 2008 Q4 9M -1.2% Operating profit +14.8% 18,868 18,641 464 18,986 21,793 4,078 5,166 5,292 -91% -22.9% 18,177 17,715 13,702 13,694
Slide 8: E&P: Operating Profit
E&P: Operating Profit Million € Reported Adjusted* Q4 08/Q4 07 +19.1% +23.9% highlights 16,415 17,416 13,788 2,105 ` Lower oil prices 14,051 2,762 -46.4% -33.1% ` Higher DD&A 3,929 4,127 ` Higher exploration 14,310 14,654 expenses 9,859 9,924 ` €/$ depreciation Q4 9M 2007 2008 2007 2008 Special item
Slide 9: G&P: Operating Profit
G&P: Operating Profit Million € Reported Adjusted* Q4 08/Q4 07 highlights -4.7% -13.5% 4,127 4,092 3,933 3,541 ` Lower volumes -33.7% 949 1,309 1,431 -38.0% sold, particularly 812 in Italy ` Reduced electricity sales 2,696 2,984 2,783 2,729 ` US$ appreciation Q4 9M 2007 2008 2007 2008 Special items
Slide 10: R&M: Operating Profit
R&M: Operating Profit Million € Reported Adjusted* Q4 08/Q4 07 nm +72.0% highlights (1,023) 566 201 27 329 729 1,222 424 365 ` Higher refining 702 margins in US$ (95) ` Higher retail margins (2,245) ` €/$ depreciation Q4 ` Lower 9M throughput 2007 2008 2007 2008 Special items & inventory valuation Q
Slide 11: Other Businesses: Adjusted Operating Profit
Other Businesses: Adjusted Operating Profit Million € Q4 2007 Q4 2008 2007 2008 Δ% (129) (91) ` Petrochemicals 90 (375) nm 250 298 ` Engineering 840 1,041 +23.9% & Construction (48) (91) ` Other activities (207) (244) -17.9% (64) (114) ` Corporate (183) (277) -51.4% 11
Slide 12: Sources and Uses of Cash
Sources and Uses of Cash Billion € Sources and uses of cash 26.4 25.1 1.0 0.8 23.0 0.2 4.3 1.2 9.9 0.7 16.9 5.2 Divestments 0.7 4.9 Cash Flow from 21.8 operations 15.5 14.6 Others 10.6 2007 2008 Capex Dividends Buy Back Acquisitions 12
Slide 13: Net Financial Debt
Net Financial Debt Billion € Total Debt 20.9 18.4 ▪ Short-term 6.8 16.3 - o/w Euro Commercial Paper 3.7 ▪ Long-term 14.1 Liquidity & Others (2.5) Net Debt 18.4 0.38 0.38 Undrawn committed bank lines 5.2 ▪ Short-term 3.3 ▪ Long-term 1.9 Undrawn uncommitted bank lines 7.1 December December 2007 2008 `
Slide 14: 2008 Cash Returned to Shareholders
2008 Cash Returned to Shareholders 2008 Cash out May 19th* 2007 Final dividend 0.70 € /share 2.6 € billion September 22nd* 2008 Interim dividend 0.65 € /share 2.3 € billion Share buyback YTD 0.8 € billion = 2008 overall cash distribution 5.7 € billion * Ex dividend date 14
Slide 15: 2009-2012 Strategy
2009-2012 Strategy Paolo Scaroni, CEO
Slide 16: Our Short Term Market Outlook: a Tough Time ahead
Our Short Term Market Outlook: a Tough Time ahead Low and Volatile Oil Price Brent $/bl 150 100 50 0 2005 2006 2007 2008 2009 Weak Gas Market Declining Refining Margins European demand - Bln cm TRC Brent 600 $/bl €/bl 9 9 8 8 400 Rest of 7 7 Europe 6 6 5 5 200 4 4 3 3 Italy 2 2 0 1 1 2008 2009 2010
Slide 17: Eni: Ideally Positioned to Cope with Industry Challenges
Eni: Ideally Positioned to Cope with Industry Challenges E&P Low-cost portfolio Leading lifting costs of 7.5 $/bl Top producer Leading Player G&P R&M Resilient cash generation Limited capital employed 72.5 97.0 Other 65.1 38.2 54.4 4% 25.0 28.8 E&P E&C 48% 4.1 8% 3.4 3.7 3.4 3.5 3.9 3.5 R&M 10% 2002
Slide 18: E&P: Sustainable Organic Growth
E&P: Sustainable Organic Growth E&P kboe/d +3.5% >1,850 >2,050 1,797 ` Large player in fastest growing areas 2008 2009 2012 ` Strong presence in giant 97 $/bl 43 $/bl 55 $/bl projects ` Focus on three core regions 85% of new production Top producer breakeven <45$/bl* Leading Player Reserve replaceme
Slide 19: G&P: Resilient Cash Generation
G&P: Resilient Cash Generation ` Strengthen our 21% leading market share in Europe ` Enhance flexibility leveraging on Distrigas acquisition ` Preserve the leading position in the Italian gas market Sales outside Italy: +7% CAGR 2008-12 Cumulative 2009-12 Ebitda pro-forma: € 20 bln 19
Slide 20: R&M: Improve Profitability
R&M: Improve Profitability ` Selective upgrade in refining with focused capex ` Market share growth in Italy ` Enhanced operational efficiency 2012 +400 mln € Ebit vs 2008 Cash neutral by 2010 20
Slide 21: Efficiency Programme to Enhance Profitability
Efficiency Programme to Enhance Profitability Corporate E&P Opex $/bl +100% 5.5 5.9 Direct costs +1.4% -7.1% Eni 5.0 (real term cagr) savings Benchmark 2005-08 2008-12 Group* 2007 2008 2012 Bln € ` Procurement & ICT processes and ` Technology improvements & structure streamlining ~2.0 operational ex
Slide 22: Disciplined Capex to Fuel Growth
Disciplined Capex to Fuel Growth Bln € 49.8 (1.0) 48.8 Others 1.0 1.0 ` High resilience in low oil Saipem 4.7 3.9 R&M 4.1 2.8 price scenario 7.0 G&P 6.5 ` High flexibility: E&P Stogit 1.8 1.5 capex ~25% uncommitted in 2009-10; ~85% uncommitted in 2011-12 E&P 31.7 32.6 ` Spending optimisation 2009 ca
Slide 23: Cash Allocation Priorities
Cash Allocation Priorities Commitment to maintain strong credit rating Attractive and flexible capex program Superior dividend yield 23
Slide 24: Exploration & Production
Exploration & Production Claudio Descalzi, COO
Slide 25: Record Production
Record Production 2008 Production Growth (%) kboe/d Production @ 64 $/boe: 1,846 +5.6% kboe/d, well net of PSA above target Eni 3.5 +2.1% +3.5% 2000 1,815 1,854 1.797 1.736 1800 BP 0.5 1600 1400 Shell -2.0 1200 1000 Total -2.1 800 600 Chevron -3.4 400 200 0 ConocoPhillips -3.9 2008 4Q 07 4Q 08 2007
Slide 26: Selective M&A
Selective M&A Eni’s M&A vs Peers ` 2008 M&A 70-80 $/bl ` Burren ` First Calgary Other competitors ` 11 billion USD in 2007-2008 Other competitors ` >100 kboed in 2008 10 $/MMBTU ` 250 kboed at 2012 8 $/MMBTU Other competitors ` NPV value + 18% vs consideration Break even price ` 3P reserves + 10 % E
Slide 27: Solid Reserve and Resource base
Solid Reserve and Resource base Proved Reserves Total Resources (Bln boe) (Bln boe) RRR Organic : 130% RRR Solid resource base to RRR All sources : 135% ~ 83% @96$ sustain long term growth ~29 0.9 (0.7) ~13.5 6.4 6.6 ~6.6 95% sustainable @30$/bl 2007 Promotions Production 2008 Proved Proved+Probable
Slide 28: Exploration Success
Exploration Success NORWAY Aphrodite UK Gamma Marulk Culzean LIBYA CROATIA US GoM U1 NC 41 Ika PAKISTAN D1 NC41 Stones Saquib 1A Kodiak Latif Hadrian B Aransas Deep ITALY Cassiopea-1 Argo-2 2008 main discoveries EGYPT New unconventional projects NIGERIA Ha’py 9 Key areas Bonga N VENEZUELA CONGO ANGO
Slide 29: Eni Growth Story and Future Goals
Eni Growth Story and Future Goals Production since 1998 kboe/d ` Focus on CAGR ~ 3.0 % sustainable 3.5% projects in main >2,050 2000 1,797 core regions 5.6% 1500 ` Increasing 1,038 exposure to Giants 1000 ` Eni’s unique 500 approach in co- operation with 0 producing countries 1998 2008 2009 2012 201
Slide 30: Focus on Core Regions
Focus on Core Regions 5.6 Top IOC producer 9.0 (1° or 2°) Leading player 7.4 Average lifting costs 7.5 $/bl Production 2008 Production 2012 1,797 kboe/d >2,050 kboe/d FSU 7% FSU 9% Others 8% Others 8% Africa 54% Africa 55% OECD 31% OECD 28% 30
Slide 31: 2009-2012 Main Start-ups
2009-2012 Main Start-ups 2009 Project start-ups Op. Peak boe/d 100% FSU Abo phase 2 √ 14,000 OECD 2 start-ups M’Boundi water inj. √ 35,000 14 start-ups Maamoura √ 7,000 Blacktip √ 14,000 Longhorn √ 29,000 WLGP+1 √ 22,000 ` 37 main start-ups Africa Oyo √ 29,000 18 start-ups Tombua-Landana 100,000 ` 5
Slide 32: Resilient Portfolio: Highly Profitable Growth
Resilient Portfolio: Highly Profitable Growth Breakeven* of New Production 2009-2012 70 60 50 Breakeven ($/bl) 40 30 20 10 0 100 200 300 400 525 New production (kboe/d) * At WACC adjusted for country risk 32
Slide 33: Growing Exposure to Giant Projects
Growing Exposure to Giant Projects Giant Projects Equity Production kboe/d Operated 69% 73% 79% production ~1,080 ~930 859 Start-ups & growth Producing 2008 2012 2014 Present in 37 giant projects (>0.5 bln boe), of which 18 operated Source: Goldman Sachs “top 190 projects” and Eni elaboration 33
Slide 34: Capex 2009-12
Capex 2009-12 Capex 2009-12 2009 Capex Budget bln euro Total 2.8% 9.2 bln euro 31.7 5.9 -5.0 32.6 -19% 1.8 2.1 4.1 -13% 4.7 Exploration Development Others Portfolio Flexibility 26.9 +7% 24.9 Committed Uncommitted 100% 80% 60% 2008-11 Additional Spending 2009-12 activities/ optimization 40% Rephasing
Slide 35: Resilient operations
Resilient operations Current production Average lifting costs 7.5 $/bl New Projects 85% of new production sustainable @ 45 $/bl Reserves 95% of 2P reserves robust @ 30$ 35
Slide 36: Gas & Power
Gas & Power Domenico Dispenza, COO
Slide 37: 2008 Results
2008 Results EBITDA pro forma adjusted Mln € Q4 08/Q4 07 5,077 (62) highlights 720 (549) 4,466 755 +4.9% ` Lower volumes sold, 1,289 particularly in Italy 1,401 +8.7% ` Reduced electricity sales 3,068 2,310 -24.7% ` US$ appreciation 2007 9M 08 Q4 08 2008 International Regulated businesses Marketing
Slide 38: Weaker Outlook for Gas Demand in Europe
Weaker Outlook for Gas Demand in Europe ` Tough competitive environment in Italy: ` 1% decline in gas consumption expected in 2009 ` 2% CAGR in the plan period ` Additional import capacity ` Revised European gas demand: ` Flat in 2009 ` 2% CAGR in the following years ` Direct entry of gas producers
Slide 39: Italy: Preserving Profitability
Italy: Preserving Profitability ` Focus on higher-margin and most loyal customers: ` Gas fired power generation segment: maintain market share ` Industrial segment: cherry-pick clients ` Residential segment: extend dual offer and overall customer base ` Further efficiency gains Maintain the leading
Slide 40: International Sales
International Sales Bcm UK/NW Benelux Europe 22% Germany/ ` Strong growth in the core 13.5* 14.8 Austria 6.8 European markets 3.2 7.6 7% 5.3 despite increasing 2.2 2.4 2008 2012 competition and slowing 2008 2012 3.1 5.2 2008 2012 demand ` Extra-European sales at France Turkey 6.9 Bcm in 2012 13% 14%
Slide 41: 2009-12 Targets
2009-12 Targets Gas Sales (Bcm) Cumulated EBITDA (Bln €) 124 19 20 114 16% 15% ` Steady expansion 61% 31% 30% 49% in international sales despite 104 weak demand 53% 55% 51% 39% ` Resilient results in all business Pro-forma 2012 2008-11 2009-12 segments 2008 Previous New target target Abroad* Italy I
Slide 42: 2009-12 Capex Plan
2009-12 Capex Plan Bln € 7.0 6.5 ` €5.3 billion in regulated 25% business with guaranteed 13% return ` €0.7 billion in international storage to increase flexibility 87% 75% ` €0.7 billion in power generation to consolidate Italian market share 2008-11 Plan 2009-12 Plan Regulated Marketing businesses
Slide 43: Refining & Marketing
Refining & Marketing Angelo Caridi, COO
Slide 44: 2008 Results
2008 Results EBIT Adjusted Mln € 196 41 566 329 FY 2007 Scenario Performance FY 2008 +60% +12% +72% ` Favorable refining scenario in 2H08 ` Higher retail contribution margin: +24% ` Italian retail market share: +140bp to 30.6% ` Cost savings: 6% workforce reduction in Italy 44
Slide 45: Refining & Marketing Vision
Refining & Marketing Vision Declining Demand Operational Efficiency Declining Enhance Refining Profitability Scenario New capacity Widespread Rationalization Focused in Middle and upgrading of refining growth in Far East capacity and marketing selective capex 45
Slide 46: Profitability Enhancement
Profitability Enhancement Refining Marketing ` Start up of 3 hydrocrackers in ` Increase retail market share in Italy 2009 ` Reach critical mass (>10%) in ` EST plant start up by 2012 Central-Eastern Europe ` Improve conversion index and Market share ` Strengthen non oil activities, operational flex
Slide 47: Reduced Capex Plan
Reduced Capex Plan Bln € -30% 4.0 Other 2.8 Refining 70% 22% EST 45% 75% Sannazzaro 33% Marketing 30% 25% Plan Plan 08-11 09-12 Stay in Development Business 47
Slide 48: Growth and Value
Growth and Value Cash neutrality Strong and resilient cash generation @ 41$/bl in 2012 Sustainable and efficient growth across core activities Superior returns to shareholders 48
Slide 49: Disclaimer
Disclaimer Data and information herewith set forth are extracted from Eni’s press release on the fourth quarter of 2008 filed with Italian authorities regulating exchanges and securities and disseminated concomitantly with this presentation. The press release on the fourth quarter of 2008 includes t
Slide 50: Appendix
Appendix
Slide 51: Results of Operations
Results of Operations Million € Q4 07 Q4 08 FY 07 FY 08 Δ% 25,378 24,607 Net sales from operations 87,256 108,190 24.0 5,166 464 Operating Profit 18,868 18,641 (1.2) 275 (2,348) Inventory holding gains (losses) 620 (936) 4,891 2,812 Replacement Cost Operating Profit 18,248 19,577 7.3 (401) (1,266) S
Slide 52: G&P: Adjusted Operating Profit by Activities
G&P: Adjusted Operating Profit by Activities Million € -38% -13.5% 1,309 4,092 114 445 3,541 523 445 1,419 812 145 International Transportation 1,549 Regulated Businesses 466 750 Marketing & 2,228 Power 1,469 201 Q4 2007 Q4 2008 FY 2007 FY 2008 52
Slide 53: Eni Share of Profit from Associates
Eni Share of Profit from Associates Q4 2007 2008 2007 2008 178 222 Equity method accounted for 632 754 15 9 ` Gas Transportation Abroad 70 44 16 11 ` EnBw (GVS) 31 45 56 51 ` Union Fenosa 181 200 8 10 ` Blue Stream 39 34 83 141 ` Others 311 431 35 92 Dividends 170 510 (1) 1 Disposals 10 3 - (22) Oth
Slide 54: G&P Share of Profit from Associates
G&P Share of Profit from Associates Million € -32.3% -1.2% 421 416 127 70 44 15 27 4 14 86 International 9 Transportation 10 Regulated 345 Businesses 337 108 Marketing & Power 67 Q4 2007 Q4 2008 2007 2008 54
Slide 55: Eni Consolidated Results
Eni Consolidated Results n.m. -26% 0.82 0.73 0.54 EPS Euro per share* -0.24 Q4 2007 Q4 2008 Q4 2007 Q4 2008 Adjusted Adjusted -2% -49% 1.42 1.28 1.26 CFPS 0.73 Euro per share* Q4 2007 Q4 2008 Q4 2007 Q4 2008 Adjusted Adjusted * Average shares: Q4 08 3,622 million Q4 07 3,661 million Note: Cash Flow
Slide 56: 2008 Consolidated Results
2008 Consolidated Results -11% 8.5% 2.58 2.80 2.73 2.43 EPS Euro per share* FY 2007 FY 2008 FY 2007 FY 2008 Adjusted Adjusted 9% 14% 5.12 5.12 4.70 4.50 CFPS Euro per share* FY 2007 FY 2008 FY 2007 FY 2008 Adjusted Adjusted * Average shares: 2008 3,639 million; 2007 3,669 million Note: Cash Flow cal
Slide 57: Capex
Capex Million € +37.5% 4,691 14,562 +28.3% 231 127 2,027 570 3,657 98 422 10,593 965 213 1,794 589 540 1,410 429 979 1,366 478 Other E&C 9,545 3,032 R&M 2,063 6,625 G&P E&P Q4 2007 Q4 2008 FY 2007 FY 2008 57
Slide 58: Main Operating Data
Main Operating Data Q4 07 Q4 08 2007 2008 Δ% 1,815 1,854 ` Hydrocarbon prod. (kboe/d) 1,736 1,797 3.5 162.1 163.2 ` Production sold* (mmboe) 611.4 632 3.4 16.2 13.3 ` Natural gas sales in Italy**(bcm) 56.1 52.8 (5.8) 8.8 13.8 ` Natural gas sales in Europe*** (bcm) 27.9 35.6 27.8 9.3 9.11 ` Natural g
Slide 59: Production by Geographical Area
Production by Geographical Area Kboe/d +2.1% +3.5% 1,815 1,854 1,797 1,736 261 301 258 230 111 128 123 Rest of World 112 279 244 261 237 Caspian Area North Sea 316 356 327 335 West Africa North Africa 641 Italy 635 594 645 207 190 212 199 Q4 2007 Q4 2008 FY 2007 FY 2008 59
Slide 60: Oil & Gas Production
Oil & Gas Production Kboe/d +2.1% +3.5% 1,815 1,854 1,797 1,736 767 775 771 +1.0% 716 +7.7% Gas Liquids 1,048 +3.0% 1,079 1,020 +0.6% 1,026 Q4 07 Q4 08 2007 2008 60
Slide 61: G&P: Natural Gas Volume Sold
G&P: Natural Gas Volume Sold Bcm -5.8% 56.1 52.8 -17.8% Italy 16.2 13.3 Eni sales (including self consumption) Q4 07 Q4 08 FY 07 FY 08 +19.9% +30.3% 51.4 17.7 42.8 Abroad 2.5 8.9 13.6 2.7 8.7 Associates 15.2 42.5 10.9 34.1 Consolidated Include E&P sales in Europe and GoM Q4 07 Q4 08 FY 07 FY 08 Natu