Eni Surpasses Expectations, Boosts Earnings Outlook and Accelerates Share Buyback Program

Analysts at Royal Bank of Canada praised Eni's robust results, attributing the beat to better upstream performance and an unexpectedly strong showing from the Plenitude division.

Italian energy giant Eni (ENI.MI) announced an optimistic outlook for its full-year earnings before interest and taxes (EBIT) and cash flow, accompanied by an accelerated share buyback program.

This news came on the heels of the company surpassing third-quarter adjusted net profit expectations, largely attributable to exceptional performances in its exploration and production (E&P) division and its low-carbon arm, Plenitude.

In light of Russia’s invasion of Ukraine last year, Eni has been diligently working to diversify its global gas portfolio, marked by new discoveries and recently inked LNG contracts.

Concurrently, the company has expanded its renewable energy capacity and diligently pursued the development of its biofuel business.

During the period, Eni reported adjusted net profit of 1.82 billion euros, exceeding the consensus estimate of 1.63 billion euros provided by the company.

It’s worth noting that this figure was lower than the remarkable 3.73 billion euros reported a year ago when energy prices surged in response to the Ukrainian conflict.

Meanwhile, adjusted EBIT stood at 3.01 billion euros, surpassing the consensus of 2.85 billion euros.

Eni’s CEO, Claudio Descalzi, announced, “We are raising our full-year guidance of EBIT and cash flow, while accelerating our buyback plan for this year.”

Consequently, Eni’s shares surged 1.15% at 0845 GMT, outperforming the 0.55% rise in Milan’s blue-chip index (.FTMIB).

Analysts at Royal Bank of Canada praised Eni’s robust results, attributing the beat to better upstream performance and an unexpectedly strong showing from the Plenitude division.

In response to improved market conditions and enhanced underlying business performance, Eni adjusted its EBIT guidance for 2023 to approximately 14 billion euros from the previous estimate of 12 billion euros.

Moreover, the company raised its full-year guidance for core earnings at Plenitude from 700 million euros to 900 million euros.

Eni also announced an acceleration of its 2.2-billion-euro share buyback program, initially launched in May, for the final months of 2023.

Eni’s newfound discoveries have led to the expectation that it will exceed its initial target of 700 million barrels of oil equivalent in hydrocarbon resource additions this year.

JP Morgan anticipates that Eni’s improved upstream performance and the assumption of higher oil and gas prices could lead to even more optimistic expectations for the company’s fourth-quarter results.

As the Middle East crisis unfolds, natural gas prices have surged, with Brent prices approaching $90 per barrel, further bolstering Eni’s prospects in the energy market.