ENI (Milan:ENI) Q1 2022 Earnings Call

0:00 Good afternoon, ladies and gentlemen, and welcome to Annie's 2022 First Quarter Results Conference Call, hosted by Mr. Francesco Gattei, Chief Financial Officer. For the duration of the call, you will be in listen-only mode. However, at the end of the call, you will have the opportunity to ask questions by pressing star and 1 on your telephone. I am now handing you over to your host to begin today's conference. Thank you.

0:27 Good afternoon. Welcome to ENI 2022 First Quarter Conference Call. On the back of recovering demand, the energy market began 2022 with a tightening upstream as supply is impacted by a number of years of low investment, yielding sustained inventory draws and low spare production capacity both in oil and gas. Correspondingly, downstream has been impacted by the effect of rising raw material prices and cost of its energy, albeit refining so a rapid recovery margins in March. The impact of the Russia-Ukraine conflict has been to hasten these prevailing dynamics further, adding further strain to an already tight market.

1:22 The direct effect of the war on energy markets and its wider implication for the global economy means conditions have also been and continue to be highly volatile, and the outlook is uncertain. In the context of the complexity of the current market, ENI was able to both significantly progress its strategy and achieve excellent financial results during the quarter. The first quarter was a particularly active period in ENI's strategic transformation. We have progressed our distinctive approach of unlocking asset growth potential and crystallizing value through new business models.

2:11 Despite the context of volatility and uncertainty, we have successfully delivered two IPOs. Since we listed VAR in mid-February, its price increased by almost 45%. In addition, in early March, we efficiently listed NIOA, the first and biggest energy transition-oriented SPAC, on the London Stock Exchange. Furthermore, we are just waiting for final authorisation to make effective the business combination in Angola with BP, which we hope to obtain during the third quarter. Head of the IPO Plenitude that is planned for 2022 subject to market conditions, we have also announced at our strategy update the incorporation of biorefining and marketing businesses into a sustainable mobility company.

3:07 And this project is now moving forward. We have also strengthened our partnership in Novamont, the world's leading biochemical company, growing our stake from 25% to 35%. Finally, we completed the sale of 49% of our gas-fired power plants to six streets. Notably, in the context of 2022, thanks to our strategic alliance ecosystem, we have been contributing to establishing alternative gas supply opportunities for Europe. We have also been widening this approach further in, for instance, signing agreements with Mozambique and Benin to jointly develop agro-bio-apps to supply feedstock to our biorefineries, while positively benefiting local economies.

4:00 Reflecting the continuous successful execution of our strategic path, in March we accelerated the pace of 2015 at zero by further improving our emission reduction target, and the board has recently authorized up to 3 billion euro of new sustainable senior bond issuance. Finally, we reconfirm the commitment to shareholder value and returns by enhancing the 2022 distribution policy with increased dividend and share buyback, offering a very attractive 9% combined yield based on current share prices. The strength of ENI's asset portfolio backed the strategic progress in the quarter, with another solid set of results, both from the operational and financial point of view. In EMP, production came in line with guidance, despite some unforeseen downtime in Libya and the export via CPC from Kazakhstan.

5:04 During the quarter, we started up the Ndungu Field, the third startup in Angola, Block 1506, in just seven months. And with the startup of the FPSO in Mexico, we initiated the first crude oil export project by a foreign company in the country, confirming, once again, our ability to deliver fast time to market. Exploration activity continues to be asset-led, which maximizes value and contributes to the short time to market. In the first three months, we discovered over 170 million barrels of oil equivalent, mainly in Angola, Algeria, Egypt and the Emirates, putting us on track to meet our planned guidance.

5:51 It was also a robust quarter for GGP. LNG operation and our flexible portfolio allowed us to manage the volatility of the markets and continue to supply our customers. In plenitude, we continue to expand our integrated business model. In just one year, we increased by four times our installed renewable capacity and increased our power generation to serve more than 10 million customers. In the downstream, where the high cost of feedstock and utilities impacted by around 400 million euros versus last year, we were able to record a significant improvement in R&M, which achieved positive results.

6:36 Chemicals, on the other side, remained negatively impacted by a challenging scenario. These results confirm the quality of our business. Adjusted EBIT of €5.2 billion is four times higher than last year, resulting in an adjusted net profit of €3.3 billion. Our cash flow for operations of €5.6 billion against CAPEX of €1.6 billion yields to an organic free cash flow of €4 billion, that covers almost entirely our annual distribution policy. And despite funding high working capital requirement this quarter, we have also progressed on the net debt side with leverage falling to 0.18.

7:28 Let's now move to natural resource in more detail. Upstream EBIT in the first quarter 2022 was 4.4 billion euro, driven by our focus on high value activities and flat cost management and capturing the prevailing market scenario. On production, we confirmed 2022 at around 1.7 million barrels of oil equivalent per day, with a contribution from new startups such as Area One Full Fill Offshore Mexico, Ndungu in Angola, and Coral Floating LNG in Mozambique, plus the ramp-up of Berkin in Algeria, more than offsetting production decline and lower entitlement due to the VAR IPO.

8:15 We expect second quarter production in the range of 1.61-1.62 million barrels per day, mainly impacted by seasonal maintenance before the ramp-up of new production in the second half of the year. GGP recorded €0.9 billion of adjusted EBIT. International LNG activities contributed 40% to results. The recovery in gas demand led to an increase of 9% in volume sold in Italy and 4% in Europe. Careful optimization of our supply portfolio helped us to manage price volatility. Considering the performance already achieved and the expected evolution of the market and assuming no significant disruption on gas supply from Russia, we expect an annual adjusted EBIT of €1.2 billion, a 30% increase to our original guidance.

9:18 The current crisis has prompted a renewed effort to strengthen energy security. we are actively pursuing alternative and additional supply opportunities for Europe, and specifically Italy, leveraging our global upstream portfolio and the strategic partnership with producing countries. In the short term, 2022-2023, we will rely on pipeline additional volume from Algeria and Libya, We also expect to import additional energy from Egypt thanks to rising damietta utilization rate, Nigeria, Qatar and potentially Angola within existing regasification capacity available in Italy.

10:05 In the medium term, we expect both gas imports via pipeline from North Africa to contribute with additional volumes. This mainly takes into account the recently signed agreement with Sonatrack. Other LNG sources from our portfolio may also be activated. These include Congo, where we have recently signed an MOU which provides for the acceleration of certain upstream development with the corresponding increase of LNG production. In Congo, we are employing a modular and accelerated development approach. This is consistent with our fast time to market, capitalized strategy and well suited to current conditions.

10:54 And now let's move to energy evolution. We confirm that we are on track with Plenitude IPO progress, having filed the registration document with the Italian market authority, and we expect to float Plenitude in 2022, subject to market conditions. Plenitude's distinctive business model proved resilient even in the current market conditions. where high power and gas prices and volatility generated some unedged volume exposure and softer performance in retail. This was partially compensated by higher renewable profitability. We are therefore able to reconfirm full-year EBITDA guidance of over €0.6 billion.

11:41 In the quarter, R&M experienced some sequential improvement, mainly benefiting from a remarkable rebound of the refining margin during March, reflecting a tight market for refined products, especially diesel. We have continued to focus on optimising water activity and mitigate the high cost of energy. As a result, we were able to report a positive EBIT of €70 million compared to about €200 million loss in the first quarter 2021. On chemicals, Versalis suffered a weak quarter due to a strong increase in oil-based feedstock costs and utility expenses. Downstream pro forma EBIT 2022 is now expected positive, previously negative, driven by the improved outlook on refining macro and action of asset optimization and efficiency initiatives.

12:41 Finally, our cash balance was further enhanced notwithstanding the seasonal and price links absorption of working capital that impacted by 2 billion euro. The underlying cash flow from operation before working capital was 5.6 billion euro, more than three times capex and resulting in organic free cash flow of around 4 billion euro. For the year, we are revising up our guidance for CFFEO to 16 billion euro at $90 per barrel, around 1 billion euro more than our previous estimate. Capacity in the quarter was 1.6 billion euro and full year is expected at 8 billion euro, confirming the original guidance at the same exchange rate.

13:36 Capital discipline through cycle is a critical component of our strategy. For this year, we expect a competitive cash neutrality for capex and floor dividend of around $46 per barrel, in line with the planned average of $45. Even with the working capital build and after portfolio activity in this quarter, we have also reduced our net debt, which now stands at 18% leverage. Low gearing confirms financial resilience and offers strategic flexibility. ENI will update its 2022 buyback scenario assessment in July for establishing the upside to the 1.1 billion euro buyback.

14:22 The extra buyback will be equivalent to 30% of the incremental free cash flow in the event that the oil price exceeds $90 per barrel on an yearly basis. That concludes my prepared remarks. I, along with ENI top management, now welcome your questions. We will now begin the question and answer session. As a reminder, please press star and one for questions. The first question comes from Michele Della Vigna of Goldman Sachs.

14:54 Thank you so much for the presentation. I had two questions. The first one really is around your fast track and dual exploration strategy, which clearly ideally suits Europe's need for security of supply at the moment. And we've seen the announcement, Algeria, Egypt, Congo, Angola, et cetera. I was wondering if you add up all of these incremental opportunities together, what extra volumes can you get within the next one, two, three years? And then staying on fast tracking, you are going to do one of the first fast tracking of floating LNG in Congo. I was wondering from that, how much could be transferred potentially to Mozambique where you will start up your development later in the year, but the whole onshore project has been indefinitely delayed because of security concerns.

15:46 Could this become the new way in which the gas resources there can be developed with a higher return and quicker time to market? Thank you.

15:55 Thank you, Michele. A very fast reply on the second question, then I will leave it for more description to Guido Brusco for the other question. On floating LNG, the concept, as you well understood, is a concept that is trying to create a completely new approach, a new model. for lng that will help substantially to reduce the cycle of lng project with less size less capital upfront shorter time to market short contract obligations so making the lng model more similar to an oil model more let's say market based unless let's say committing in term of land long-term delivery so this is a concept that We are, let's say, applying to Congo, but clearly has a lot of opportunity of uses.

16:50 Currently, you have identified Mozambique as an alternative to security issues, but there will be other opportunities that could emerge. Now I leave it to Guido for more detail on all the questions.

17:04 Okay, thank you, Francesco, and thank you for the question. So clearly, in our plan, we have already projects and activity to deliver more than 450,000 barrels of gas in 2025. And given this current scenario, we've been able to unlock... We've been able to unlock projects to deliver and to mobilize 14 TCF of additional gas resources in Congo, in Egypt, in Algeria. Sorry, a problem with the microphone. So can you hear me now? This project are in Congo, but also given our infrastructure-led exploration, we have also opportunity in Egypt, in Algeria.

18:03 This may add to our production profile in 2025 about 50,000 barrels. And in terms of equity capex in a four-year plan, thanks to the configuration of our project, we expect less than a 5% increase, which is well within our flexibility of our capex upstream, overall capex upstream. Going to Mozambique, as you know, the operator is, while monitoring the security situation, is still looking to opportunities to optimize the concept, leveraging on synergies with the Area 1. On the other hand, we are looking at opportunities to implement development offshore fast track modular like in Congo, and we will come back on those. And we are already engaging partners and other stakeholders. Thank you.

19:07 Thank you. The next question is from Irene Hermona of Societal Jesuit Love. Please go ahead.

19:17 Thank you. Good afternoon and congratulations on a strong quarter. I had two questions, please. Firstly, your Q1 interest expense, $339 million, is materially higher than in the previous two quarters. This is despite your declining leverage. So I wonder if you can help us understand this very sharp increase. And secondly, An update on Kazakhstan, please. What is your current production level, and is there a disruption to flows, particularly through the Russian pipeline, given the weather damage reported recently? Thank you.

19:58 Yes, I replied to the first related to the interest. The increase that you see is mainly related to the change in interest rates that is clearly impacting the yields. And the other effect is related to foreign exchange effects. So that are the two main drivers for the increase that you see. Then there are some, let's say, one-off effects that are less relevant. About the... the kazakhistan production i leave back the the floor to guido

20:32 Our production in Kazakhstan is above 160,000 barrels of oil equivalent per day. Indeed, we had some disruption on the export line CPC. It happened in mid of April. But now, in the last couple of days, this has been recovered and we are back in full production.

21:04 Thank you very much. The next question is from Massimo Bonazzoli of Equida. Please go ahead.

21:16 good afternoon three very quick question one on the serm refining margin if you can provide an indication for the average in april the second on the networking capital if you can provide a also some guidance on the remaining effect over the rest of the year and the third on the on Novamount, on the strategy of Novamount following the increase in the stake of the company, if you are considering any strategic decision there or even IPO.

21:51 Yes, thank you, Massimo. About CERN, clearly we are seeing a completely different trend versus the last and the past month. Particularly CERN was negative practically for the entire 2020-2021 period. From April, from March, from the middle of March, we saw a progressive increase in the CERN in this quarter. So starting from April, the average is around more than $14 per barrel. The current last figures are between $18 to $20 per barrel. So the CERN clearly is materially impacted by the diesel spread that you see in the market.

22:42 in term of working capital you have seen that there is a an increase and absorb of working capital in the first quarter this is normal is a seasonal trend that you see in all clearly all all first quarter of the year that is amplified by the price scenario that we are we are seeing so the trade receivable amount this is clearly reverted during the year We have an additional element that will impact the working capital during the year, that is the derivatives. In fact, if you remember last year at the end, in the last quarter, there was a positive result from cascade of derivatives, in particular of power. This will return is almost 1 billion in the year.

23:29 during this year, but we have clearly planned with this well in advance. So you will see in the coming quarter a return, a reduction of this working capital effect, but around we are expecting something in the range of 2 billion of negative impact of the working capital because of this effect of derivatives that I referred to before. About Novamont, I would like now the question to Adriano Alfani. Clearly, our move from 25% to 35% is an opportunity to reinforce the partnership. I will leave him some additional color on this news.

24:16 Sure. Thanks for the question. So this agreement starts with the intention to make a strong field in the plastic sector, combining a traditional portfolio that Versailles has today. based, of course, on polyethylene ester in its market and technology, and also with the technology that Novamont has in terms of bioplastics, all that they've developed over the last 20-plus years in terms of green chemistry. The two companies now that have a different governance and also a different participation in terms of versatility in Novamont, have been discussing in order to strengthen partnership and enhance value creation by joint effort in the market. And of course, these leave open for any possible solution in the future.

25:07 Very clear. Thank you very much. The next question is from Biraj Borkartaria of RBC. Please go ahead.

25:17 Hi there. Thanks for taking my question. The first one's on the very strong gas trading result in Q1. Obviously, you raised the guys for 2022. I was wondering if you could give a little bit of color on 23, given the expectation, obviously, in your slideshow as well, the incremental volumes that will come through into that organization going forward. And the second question is on the low carbon side. What we've seen from E&I and in terms of policy is an acceleration of various parts of energy. And it looks like there'll be more opportunities in low carbon than previously anticipated. Particularly in Europe, the content looks to accelerate the transition.

26:03 So should we expect E&I looking to accelerate in low carbon as well as on the short cycle gas front? given such strong free cash flow and a manageable debt profile at this point. Thank you.

26:18 Okay. I leave now to Cristian Signoreto for the first question, and then I will come back for the second.

26:26 Hello. So thanks for your question. On the LNG trading business, let's say this quarter has been clearly sustained for two reasons. On the one hand, we had an increase of LNG availability vis-à-vis last year, and clearly also the price environment was actually very prone for optimization and, let's say, value capturing. If I have to project this into the future, I would tell you that clearly we have a trajectory of increasing LNG portfolio in the coming years, so clearly this will provide further opportunities for increasing the volume available for sales and for optimization. And on the other hand, I mean, we believe that the LNG and gas market is going to stay tight for quite a while given the current situation and the current geopolitical stress. So I would expect also that, you know, clearly a tightening scenario will clearly benefit also that line of business.

27:31 about the the opportunity that clearly are growing in terms of transition and low carbon opportunity you have seen that we have presented in the last capital market day an improved and quite let's say aggressive piece towards decarbonizing our activities We have also added to this trajectory, to this plan, also the tools that we are implementing. These tools are made of business model, business opportunity, new financial solutions, and referring clearly not only to Plenitude but to the new, let's say, sustainable mobility company. The SPAC, that is another element that we are adding to capture technology and the opportunity to improve and to add additional option to this evolution.

28:29 In this quarter, for example, we have invested in the CFS, so in the nuclear fusion, maintaining our leadership position in that venture. And as we were referring before on Novamont, We are increasing our exposure to biochemicals. So ENI is already well committed, and we will continue to exploit in the most, let's say, diversified way all the different segments and businesses that are emerging, including, for example, also the CCS. That is an additional, let's say, business line where ENI is involved. is on the front page. So I think that I agree with you. There will be, in this market scenario, emerging opportunity, and we'll have also the capability to speed up in many of the different fronts.

29:29 Okay, thank you. The next question is from Oswald Clint of Bernstein. Please go ahead.

29:37 Yes, thank you. Thank you, everyone. Just back on the global gas and global gas business. And if we could just focus on the pipeline part of the business and the trading around that piece into Europe, into Italy, could you just tell us a little bit more about what you're up to in the quarter in terms of logistics and optimize time spreads, please? And I mean, I'm really trying to get was this a kind of all time best performance from the team there? And As you said, the market's going to stay tight. You're bringing some more gas into the portfolio. So could we think about this level of performance being sustained here? And then secondly, you talked about the refining margin as well, but there is energy utility cost headwinds against that. So I know you're taking some steps to alleviate that, but could you flesh those out a little bit, please?

30:28 Just tell us what exactly you're doing to

30:31 alleviate those pressures and and could we see some of those taking effect through the rest of 2022 please thank you thank you oswald i will leave the the second question to giuseppe ripino ricci that is connected by phone and then come back to christian yes so thanks for the question so on the uh sorry Pino, if you could answer about the... Okay, I'll start immediately, Francesco.

31:01 About the refining margin, of course, these are affected... for the high utilities cost. But in our system, starting from the fourth quarter of last year, we implemented a lot of initiatives to reduce the methane consumption in the refineries, replacing the methane consumption with other fuels like LPG and other light tanks, and recently we also put in in service a plant gasification of lithium to produce syngas that replace methane in in our power station and also we modify all the configuration of the plant in order to minimize the use of steam reformer for hydrogen production that are very high consumer of methane.

32:05 In this way, we are able to reduce the methane consumption by 70%, and so two-thirds of the extra cost of utilities are neutralized. This means that our margin gain of this effect and in the last month, March, we recover all the losses because of the low margin of January and February. And now in April, we are in a much better condition.

32:47 Okay, now I'll leave back to Cristian.

32:50 Yeah, so on the gas result for this quarter, first of all, clearly, you know, the market has been very, you know, volatile, and clearly with the flexibilities and optionalities in our contracts, we took advantage of surely the time spread, so we anticipated... many of the flexibility that we had in our contracts this quarter because of the wild, let's say, price movements, but also on the geographical spread. You probably have seen that there are spreads between the markets in Europe which are unseen because of the situation of the market. So clearly this is basically, you know, bills explain at least 30% of the exceptional result of the activity in the first quarter. So then going ahead, well, on the one hand, as I explained, so some of the flexibilities we have already optimized so we have less to being able to monetize in the following months.

33:55 And as you know, I mean, our business is a bit cyclical in the sense that, you know, there are quarters in which we can be, you know, we can outbid the market but also then quarters in which we are borrowing a bit in order to make that extra performance. And so, let's say, clearly, you know, the volatility of the quarters is such that we project a 1.2 billion results by the end of the year, which means that there will be, you know, some quarters in which we're going to be weak. And then, let's say, probably the last quarter, which is the winter quarter, we will be able to achieve that target. On the other hand, clearly, again, wild market movements and opportunities will be there to be captured if there are the opportunities.

34:42 One thing I want to stress is that clearly this target is assuming, as Francesco was saying, a steady flow and no disruption from Russia.

34:54 Thank you. Thank you all. The next question is from Henry Patricot of UBS. Please go ahead.

35:04 Yes, everyone. Thank you for the update. Two questions, please. The first one is just on the gas business and the gas supplier coming from Russia. Can you give us an update on where you are in terms of the new payment mechanism? What are your expectations here? And what would be the impact for if there was an interruption of gas supply to Italy for one reason or another. And the second one, just a quick follow-up on refining, just to get a sense of the margin capture in the second quarter. Should we expect to see higher utilization from, I think it was 70% in the first quarter, or do you have some more maintenance with the rest of the year? Thank you.

35:49 Okay, I will reply to the first and then come back to Pino. About the mechanism of payment, what we can say that we are clearly continuing to analyze the situation and that we are in strict coordination. with the authorities, with the European and the Italian government. You know that clearly what we are going to pay, we will pay the gas delivered in compliance, through compliance with the contract terms and following the international sanctions. So we will respect clearly all these rules. The currency of the contract is euro and we continue to receive invoices in accrued in euro.

36:33 and we have not opened the arable account that is what we can we can say now i leave now to uh to pino for the uh utilization rate and refining performance thanks francesco in in the third quarter our utilization rate was about 70 percent but uh just in in the in march we started to to increase the capacity of the plant in all refining system. And in second quarter, we expect to have the maximum utilization, maximum possible utilization, gaining the moment of high margin. We have moved all the maintenance shutdown in advance in order in the next quarter in the second part of the year in order to avoid any shutdown .

37:34 And this is the same in Italy, Europe, and ADNOC in . Thank you. The next question is from Alessandro Pozzi of Mediabanca. Please go ahead.

37:55 Hi there. I have a few questions. The first one on tax rate, it's been very low this quarter. Clearly, the impact of higher oil prices is a positive factor. I was wondering if you can give us a bit more color on what are the moving parts and what should we assume for the rest of the year? And also, maybe if you can quantify the impact, Olivia, I believe that when you have a really high spot prices in Italy that helps also lowering the tax rate. And the second one is on exploration, always been your forte. I was wondering what are the next maybe one or two key high impact wells that you're planning to drill over the next few quarters? And lastly, I think if I look at the planning to the retail gas sales, you clearly managed to make a big improvement in the power sales and number of clients.

39:01 But in terms of retail gas sales, I think it's down 3% year on year. I was wondering whether they're just purely the impact of demand elasticity given the higher prices.

39:16 Thank you, Alessandro. Now I'll leave it to Luca Bertelli for the answer related to the exploration, then to Stefano Goberti for plenitude, and then I will come back for the tax rate.

39:32 Okay, for what concern, important wells that we are going to drill in the remaining part of the year, we will have further activity in Egypt, further activity in Angola, We will have a well in offshore Mozambique. And finally, also, we'll become back drilling on Balayne Discovery. We already started to drill a price of development well this year. And finally, also, other wells in Angola, Newfield-Wycock.

40:12 Which one do you think is the most important one of those?

40:16 The most important one? I don't know which is the most important one. You know, our work is a lot of risk associated, so I'd say that all together is a good package of wealth that will provide the results that we expect for a year.

40:42 All right. Fair enough. Thank you. Stefano, please.

40:46 Okay. Thank you, Alessandro. On plenitude itself, the result will be a little bit softer this quarter compared to last quarter because of the volume effect, mainly linked to the fact that we, to our retail client, we sell at fixed prices. And when we become at the end of the period, we are short, we need to rebuy the commodity in order to serve their consumption in the first quarter. the weather was particularly against us because it was colder than the forecast. So this is the effect on the economic result. In terms of volume, we, in plenitude, we did not record a specific trend in reduction of consume, but maybe the other way because of the weather condition.

41:34 Maybe you are referring to the overall portfolio, and I portfolio gas in your question.

41:40 Okay, yeah. In terms of tax rate, you know that clearly we have already guided in the past with a 50% tax rate in a $70, $80 world. Now clearly we are above that. The composition of that result has clearly impacted the tax rate. As soon as the price of oil and gas is growing, you have benefit by the tax. positive contribution of countries with lower tax rate in the INP businesses. Also the benefit of the contributor of GGP is helping to reduce the tax rate and also the results of affiliates.

42:29 So as a sort of guidance, a rule of thumb for the year is In the current price environment, around $100 per barrel, $95, $100 per barrel, I will confirm something in the range of 40%. The comment related to Libyan gas, I would say more than that is the benefit of upstream results, even clearly in Italy, in the current price environment, is helping. to have a contributor a positive contribution also from from from that business and this clearly is another of the factors that reduce the tax rate okay thank you very much maybe if just a follow-up on the uh payment mechanism to to russia uh when is the the deadline for the next payment

43:21 for the April gas delivery.

43:24 You know that you pay within the following month, so the April delivery is paid during May.

43:32 Sometime in May.

43:33 Okay.

43:35 Thank you. The last question is from Bertrand Hody of Capital Chevro. Please go ahead.

43:43 Yes. Hello, everyone. I have one question left. Francesco, can you quantify the risk in terms of financial terms if gas from gas supply were to stop for any reason? Have you already committed to sell some of this gas to third parties on a forward basis? And in short, will you be able to call for force majeure and under what condition? And if Is there a risk of mismatch between your alternative source of supply and your already committed selling gas price?

44:31 It is a complicated question. I think that you know that there are a lot of different option alternatives and flexibility in our portfolio. We were referring before to the new routes or additional volumes that we added during the past month. Clearly, there is also LNG that could be, let's say, captured through the market opportunity. And therefore, clearly, it is too difficult now to give you an answer because there will be many, many components that have to be matched. In general speaking, if there are special or extreme conditions, there are contractual protections. and a general legal coverage that could be called in terms of force majeure. So in that case of a string condition, you could have also that level of protection. So I will say that there are different tools that could be activated in different scenarios.

45:35 Thank you. Can I ask just a follow-up? Are you still selling... let's say longer than one month ahead your expected supply from Gazprom or have you completely stopped selling on a forward basis volumes that could eventually disappear?

46:01 I think this is a commercial sensitive information that I prefer not to disclose. Fair enough. Thank you. We have another question that has joined it from Alistair Syme of Citi. Please go ahead.

46:18 Thanks very much. Can I just ask on the accounting treatment that you've put into SIPM, it's still a little bit unclear of what's gone through this quarter and what's still to come for the remainder of the year in terms of the recapitalization.

46:37 We had considered the contribution to SIPEM. You know that we have, let's say, provided financial support in terms of future increase of capital. You will see in our portfolio and many activities So it is practically the share of E&I, the contribution of E&I of the 1.5 billion that was the first step is already included in that amount of portfolio, net portfolio activity.

47:15 But is there something for the future underwriting that has to go on the balance sheet as well?

47:22 We have already included the provision for the additional increase of capital.

47:27 Right, OK. Thanks very much. Gentlemen, there are no more questions at this time. Would you like to make any closing remarks?

47:38 Thank you. Thank you to all for the question. I think that the quarter was confirming the strategic path and the effective of our execution. And clearly, we will thank you and we remain in contact for any additional question. There is our investor relation team with Jonathan Rigby that you know very well as new head for answering all your questions. Thank you very much.