Eni S.p.a. · MIL:ENI

Eni — Investor Presentation (March 2018)

42 slides from Eni's investor presentation, Mar 16, 2018

  1. Slide 1: Enhancing value through business integration and financial discipline

    Enhancing value through business integration and financial discipline 16 Marc 18

  2. Slide 2: Disclaimer

    Disclaimer This document contains forward-looking statements regarding future events and the future results of Eni that are based on current expectations, estimates, forecasts, and projections about the industries in which Eni operates and the beliefs and assumptions of the management of Eni. In add

  3. Slide 3: Eni's 2018-2021 Strategy Presentation

    Enis 2018-2021 Strategy Presentation 2014-17 COMPANY POSITIONED FOR A LOWER SCENARIO 2 2018-21 VALUE EXPANSION IN ALL BUSINESSES 3 DECARBONIZATION AND SUSTAINABILITY IN THE PLAN 4 FINANCIAL PLAN AND DISTRIBUTION POLICY

  4. Slide 4: Fit to Grow: Eni 2014-17 strategy

    Eni 2014-17 strategy 4YP 2014-17 2018-2021 COMPANY POSITIONED FOR A LOWER SCENARIO TRANSFORMATION into a fully integrated O&G FIT to GROW UPSTREAM enhancement MID-DOWNSTREAM restructuring FINANCIAL resilience 4

  5. Slide 5: Upstream enhancement

    UPSTREAM enhancement FASTER… Dual Cash in from disposal TIME TO MARKET | years since 2013 $ 10.3 bln EXPLORATION Industry* 4 5 Eni 2 2.5 From discovery to FID From FID to Start-Up Integrated MODEL … MORE EFFICIENT NPV of Projects UPSTREAM CAPEX CASH NEUTRALITY | $/bbl from exploration since 2014 $ 8

  6. Slide 6: Mid-downstream restructuring

    MID-DOWNSTREAM restructuring  Structurally underlying positive Cumulative CFFO| € bln  Long-term contracts alignment to market level  Take or Pay recovery 1.8 2017  Cost reduction G&P 6.1  Production efficiency  Logistics rationalization  2 sites converted to bio- plants  Halved refining bre

  7. Slide 7: Financial discipline

    FINANCIAL discipline GEARING DIVIDEND CASH NEUTRALITY* | $/bbl WHILE PRESERVING BUSINESS GROWTH Peers adopting scrip dividend 114 18% Change since 2013 (% points) 14% 39 Dual including 10% Exploration dual 6% 57 effect exploration model 2% -2% 0% 10% 20% 30% 40% Gearing % 1 2 3 4 5 2014 2017 2017 7

  8. Slide 8: 2018-21 Value expansion in all businesses

    2018-21 2 VALUE EXPANSION IN ALL BUSINESSES

  9. Slide 9: Eni strategic evolution: business integration along the value chain

    Eni strategic evolution BUSINESS INTEGRATION along the value chain UPSTREAM enhancement UPSTREAM-MIDSTREAM VALUE GROWTH UPSTREAM - DOWNSTREAM UPSTREAM - RENEWABLES EFFICIENCY FINANCIAL DISCIPLINE DECARBONIZATION PATH DIGITALIZATION & & GREEN ENERGIES INNOVATION 9

  10. Slide 10: Upstream key targets in the 4YP

    Upstream key targets in the 4YP 3.5% 2 bln CAGR 2017-21 organic boe 4YP expl. resources ~40 22 Upstream CAPEX $/bbl € bln 4YP upstream FCF COVERAGE 10

  11. Slide 11: Abu Dhabi deals: diversifying our portfolio, strengthening Zohr JV

    United Arab Emirates - Abu Dhabi deals DIVERSIFYING OUR PORTFOLIO… …STRENGTHENING ZOHR JV FARM-IN: NASR 5% Lower Zakum UMM SHAIF 10% Umm Shaif/Nasr LOWER ZAKUM FARM OUT 10% to Mubadala ZOHR JV 50% Eni (operator) 30% Rosneft 10% BP 1 BLN BOE 3P/3C equity of which 10% Mubadala >300 Mln Boe P1 11

  12. Slide 12: A global range of exploration opportunities

    A global range of exploration opportunities Barents Sea North Slope Net Acreage 400,000 km2 at YE 2017 Porcupine Equity Basin Risked Potential 10 acreage| Eni net sq km Morocco Egypt & Oman Mexico offshore Levantine offshore Vietnam bln boe offshore Transform Lamu Myanmar Margin 4YP Spending * Lower

  13. Slide 13: Ramp-ups and start-ups driving growth

    Ramp-ups and start-ups driving growth MAIN ONSTREAM PROJECTS OIL & GAS PRODUCTION | kboed 15 MAJOR START-UPS  Zohr 2018  OCTP Gas CAGR 2021-2025  West Hub - Ochigufu  Jangkrik Complex CAGR 2017-2021 3%  Bahr Essalam Ph.2 3.5%  Wafa Compression  Nidoco Ph. 2/3 2018 4%  East Hub  Area 1 Mexic

  14. Slide 14: Key projects

    Key projects Zohr 50% WI Mexico Area 1 100% WI 2018: 185 kboed Start up: 1H 2019 Plateau: 545 kboed @2021 Progress: under FID Plateau: 90 kboed @2022 Great Nooros 75% WI Merakes 85% WI 2018: 210 kboed Start up: 2H 2020 Progress: ph.3: under FID Progress: under FID Plateau: 210 kboed @2018 Plateau: 7

  15. Slide 15: Value expansion of production growth

    Value expansion of production growth CASH FLOW PER BARREL | $/boe 4YP start up 4YP start up 25.2 24.5 $22/boe @ $70 18 scenario 17.5 16.7 legacy 15.8 legacy 15.5 @ $60/bl scenario 14 @ 2017 scenario 2017 2018 2020-21 HIGH QUALITY LONG TERM CASH FLOW 15

  16. Slide 16: The rise of upstream cash flow

    The rise of upstream cash flow Upstream CFFO € bln 13 Upside @ $ 70/bl 11 9 7 Capex Upstream 5 3 2017 2018 End of plan Brent $/bbl 60 60 60 FULL COVERAGE OF DIVIDEND WITH UPSTREAM FCF 16

  17. Slide 17: Mid-downstream key targets

    Mid-downstream key targets 2 4.7 € bln € bln EBIT end of plan Total 4YP FCF 17

  18. Slide 18: Gas & Power - bigger and stronger

    Gas & Power - bigger and stronger EBIT | € bln Gas & LNG Marketing and  Integration with upstream Gas & LNG Marketing and Power Retail – Eni gas e luce 0.8 Power  Focus on Asia and new markets  2025 contracted volumes: 14 MTPA 0.3 0.2  Redefining relationships with key gas suppliers 2017 2018 En

  19. Slide 19: A top player in the LNG market

    A top player in the LNG market LNG SUPPLY - EQUITY VS THIRD PARTY 2017 2021 30% 70% Equity Third Party LNG contracted volumes 12 MTPA @ 2021 19

  20. Slide 20: R&M – leaner and greener

    R&M – leaner and greener EBIT | € bln Refining  Breakeven margin $3/bbl end 2018 Refining  Deep conversion proprietary 0.9 Marketing technology licensing 0.6  Asset optimization 0.5 Biofuels  Venice and Gela plants onstream  Ecofining proprietary technology 2017 2018 End of plan  2021: 1 Mton/

  21. Slide 21: Versalis – an international player

    Versalis – an international player EBIT | € bln Chemicals  Consolidation industrial footprint 0.5  Strengthening international 0.4 presence 2017 Scenario  Business integration 0.3 effect Differentiated products  New products’ development 2017 2018 End of plan  Focus on high margin products  Ac

  22. Slide 22: New energy solutions

    New energy solutions AN INTEGRATED MODEL Capacity end year| GWp 5 ~1  Synergies with Eni assets and activities  International expansion in Eni Countries 2018 2019 2020 2021 2025  Solar, Wind and Hybrid Technologies  R&D Deployment 4YP CAPEX € 1.2 Bln 22

  23. Slide 23: Digital transformation

    Digital transformation 2017 2021 BUILD ON OUR DIGITAL ACCELERATION along our value chain SUCCESSFUL DIGITAL Upstream Mid- Downstream HISTORY Exploration Development Drilling Operations Refining/Chemicals Trading Retail INVESTMENT IN Enhanced Seismic Imaging & data processing ASSET INTEGRITY Blockcha

  24. Slide 24: Digitalisation key targets 2018-2021

    Digitalisation key targets 2018-2021 DIGITAL SOLUTIONS & ADV. ANALYTICS 100% 100% 100% Strategic Rotating Operated Wells * Top Value Assets * Machine * PRODUCTION DRILLING ADV. EXPLORATION COST ANALYTICS PHASE - 7% -30% -15% NPT * 24 * Operated Assets

  25. Slide 25: Decarbonization and sustainability in the plan

    DECARBONIZATION AND 3 SUSTAINABILITY IN THE PLAN

  26. Slide 26: An effective path to decarbonization

    An effective path to decarbonization 2014-17 4YP 2018-2021 …2025 DECARBONIZATION PATH AND GREEN ENERGIES Carbon footprint reduction Low carbon and resilient O&G portfolio Green businesses R&D 26

  27. Slide 27: Carbon footprint reduction

    Carbon footprint reduction Direct Emissions Upstream | tCO2eq / toe TARGETS @ 2025 UPS UNITARY -43% DIRECT EMISSIONS vs 2014 ROUTINE GAS FLARING zero 2007 2014 2015 2016 2017 2025 FUGITIVE -80% EMISSIONS | MtCH4 vs 2014 GROSS OPERATED 2018-2021 Capex > € 550 Mln 27

  28. Slide 28: A low carbon and resilient O&G portfolio

    A low carbon and resilient O&G portfolio O&G resources | % CO2 scenarios| $/ton Avg. breakeven < $30/bl 250 200 150 Oil 100 Gas 50 0 2018 2023 2028 2033 2038 CO2 IEA SDS CO2 Eni NEW PROJECTS PORTFOLIO FOCUSED ON PROJECTS RESILIENT EVEN IN LOW CONVENTIONAL RESOURCES ROBUST EVEN AT IEA SDS* SCENARIOS

  29. Slide 29: Our green businesses

    Our green businesses BIO-FUELS BIOBASED-CHEMICALS NEW ENERGY  P. Torres: JV integrated chemical Progetto Italia complex from renewable  Installed capacity by 2021: 220 MW VENEZIA - 2nd fase – ongoing  Production capacity up to 0.4 TWh/y  Green capacity up to 560 kton/y Total capacity bio-interme

  30. Slide 30: Financial plan and distribution policy

    FINANCIAL PLAN 4 AND DISTRIBUTION POLICY

  31. Slide 31: Core financial values

    Core financial values SHAREHOLDER RETURNS SUSTAINABLE F INANCIAL GROWTH D ISCIPLINE 31

  32. Slide 32: CAPEX Plan

    CAPEX Plan 2018 capex: ~ € 7.7 bln 2018-2021 capex: < € 32 bln Other Mid-Downstream 15% 49% 3% >80% Upstream 26% 7% 4% 7% 4% Exploration Prod. optimiz. & stay in business Development Upstream G&P R&M Chemicals Energy solutions 32

  33. Slide 33: Upstream: focus on projects under development

    Upstream: focus on projects under development Cumulative Net Cash flow IRR Dual Exploration benefit not included $bln 18% 25 16% 15 5 13% -5 $50/b $60/b $70/b -15 2017 2018 2019 2020 2021 2022 2023 2024 2025 NCF NCF including dual exp model < $30/bbl Anticipated payback BREAKEVEN 33

  34. Slide 34: Cash flow growth

    Cash flow growth € bln 15 10 5 CAPEX CAPEX CAPEX 0 2017 2018 Plan End Underlying operating cash flow @ $60 Underlying operating cash flow @ $70 Working capital change + deferred cash in 2018 from Zohr disposal 34 Data @ 1.17 €/$ exchange rate

  35. Slide 35: Reducing cash neutrality

    Reducing cash neutrality $/bl 58 53 @ 4YP €/$ exchange rate @ 2018 €/$ exchange rate = 1.17 48 2017 2018 end of plan 35

  36. Slide 36: Enhancing our 2017-2020 targets

    Enhancing our 2017-2020 targets 2017-2020 2017-2020 today previous plan Exploration discoveries 2.6 bln boe 2-3 bln boe Production CAGR >3% 3% LNG sales by 2025 14 MTPA 10 MTPA New projects breakeven < $ 30/bbl $ 30/bbl Business Mid-Downstream CFFO € 8.3 bln € 7.9 bln Capex € 31.6 bln € 31.4 bln Org

  37. Slide 37: Remuneration policy and cash allocation

    Remuneration policy and cash allocation Committed to DIVIDEND POLICY PROGRESSIVE WITH € 0.83 in 2018 UNDERLYING EARNINGS AND FCF + 3.75 % vs 2017 Preserving BALANCE SHEET Leverage target 0.2 – 0.25 STRENGTH Upside SHARE Excess cash BUY BACK distribution 37

  38. Slide 38: Conclusions

    Conclusions DEEPER INTEGRATION CAPITAL DISCIPLINE High margin growth Sizeable and in Upstream competitive LNG Sustainable Mid-downstream portfolio upgrade ENHANCED RETURN TO SHAREHOLDERS 38

  39. Slide 39: Back up

    Back up

  40. Slide 40: Assumptions and sensitivity

    Assumptions and sensitivity 4YP Scenario 2018 2019 2020 2021 Brent dated ($/bl) 60 65 70 72 FX avg ($/€) 1.17 1.18 1.20 1.25 Std. Eni Refining Margin ($/bl) 5.0 5.0 5.0 5.0 NBP ($/mmbtu) 5.8 5.6 5.5 5.8 PSV (€/kmc) 188 178 171 175 Sensitivity* EBIT adj (€ mln) net adj (€ mln) FCF (€ mln) Brent (-1 $

  41. Slide 41: Main start-ups in the 4YP

    Main start-ups in the 4YP Equity Working Liquids/Gas Main start ups 2018-2021 Country Op Start-up peak in 4 YP kboed Interest Zohr Egypt yes Achieved 12/2017 200 50% Gas West Hub (Ochigufu) Angola yes Achieved 03/2018 <10 37% Liquids Wafa Compression Libya yes 1H18 25 50% Liquids/Gas Oil: 5/17 OCTP

  42. Slide 42: Reference TCFD dashboard

    Reference TCFD dashboard Recommendation ANNUAL REPORT SUSTAINABILITY REPORT GOVERNANCE a a Disclose the organization’s governance around climate-related Key elements Disclosure risks and opportunities. STRATEGY Disclose the actual and potential impacts of climate-related risks a a and opportunities

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