ENI S.p.A.

Thank you. Thank you.

Good afternoon and welcome to United Third Quarter nine month 2024 results conference call. Energy markets continue to be volatile and unpredictable, driven by a mixture of fundamentals, geopolitics and speculative trading flows. Our focus is on maintaining resilient and competitive operating and financial performance, reinforcing our balance sheet while funding both investment into the business and attractive distribution to shareholders, and progressing our strategy. In the third quarter, we clearly continue to deliver on all those objectives. In Q3, we did report resilient results with pro forma adjusted EBIT of €3.4 billion and cash flow from operational of €2.9 billion, despite deterioration in scenario across most of our main businesses. We also lowered debt and leverage well ahead of our original plan. I will speak in more detail on our results shortly. Let me focus on strategic activity. We are executing at pace around a clearly defined portfolio of businesses. Those businesses are both transition-oriented and where ENI has clear competitive advantages and where we can generate competitive growth and returns. Starting with the transition satellites and AnyLive specifically, we are delighted to have confirmed the investment by KKR into AnyLive. The 2.9 billion investment for a 25% stake supports our growth and confirms the value already created. Similar to our planetary transaction earlier this year, it assesses a new pool of aligned capital, more appropriate for the different growth and risk profile of this business. Furthermore, the growth is clear. In Q3, we sanctioned two biorefineries, South Korea and Malaysia, and confirmed that construction work at Livorno will begin soon, and we will start our first biojet plant in Gela at the end of this year. Upstream continues to be an area of significant distinctiveness and competitive advantage. In August, we began gas production at Argo Cassiopeia offshore Sicily. Production at Xeronscope 1 and 2 will quickly ramp up into the winter, contributing to gas supply for Italy. John Casper and Ballet in Phase 2 will start up before the end of the year, contributing to reach our production targets. Also in August, and only 10 months after the discovery of Gang North, Indonesian authorities approved our plan of development of the northern hub in the Kutai Basin, as well as significant extension to the plateau at our southern hub centred around the existing Junk Creek FPU. Together, these two hubs will account for over 400,000 barrels per day and the Aeneas equity is over 80%. Additionally, we have identified over 30 DCF for near-field exploration potential, offering potentially very material upside. The scale of this opportunity underscores our growth potential beyond the end of the current four-year plan, and of course offers the opportunity for some early monetization via our proven dual exploration model. While Prenit and Enel Live are currently our main transition satellites, Q3 also saw an important milestone in the development of a new one, CCUS. First CO2 injection began at our Ravenna project here in Italy. This is the first plant able to capture more than 90% of the CO2 emitted by our upstream plants. At the same time, we secure the key milestone of agreed government funding on our INET CCS project in the UK. As a reminder, we are looking to build over 50 million tonnes of capacity before 2030 and grow that to over 40 million tonnes in the 2030s and it is an ideal vehicle for a tailored satellite structure. Turning now to our Q3 results in more detail, we reported pro forma just a debit of €3.4 billion and cash flow from operation of €2.9 billion, both down just 14% year-on-year despite a deterioration in the scenario. Our upstream business were the standout contribution to our results this quarter. Our satellites and associates made up over one-third of our EBIT. Finance expense remained slow even before debts began to fall materially, while the tax rate of 51% was consistent with this quarter's oil price and earnings mix. Cash flow from operation for the quarter was €2.9 billion, giving €10.7 billion for the nine months, a consistent conversion of profits into cash. This has served to cover a working capital build, CAPEX, net M&A, the dividend, and a portion of the buyback to date. After the effect of the cash-out for Neptune in Q1, net debt has fallen in Q2 and Q3, even with only modest divestment income. We will see an acceleration of this reduction in the coming quarters. Cap is for the quarter was 2 billion euro, and for the 9 months was 6.1 billion euro, minus 10% versus last year. We expect to be below 9 billion euro for the year, even taking into account the seasonally normal uptick of the last quarter. Net cap was €1.6 billion in the quarter and should be below €6 billion, assuming the cash inflow of agreed transactions waiting to close at the end of the year. In global natural resources, EMP contributed 3.2 billion euro of pro forma EBIT, with results resilience in the face of lower crude prices and helped by production up 2% year on year. GGP delivered a strong quarter for the summer months, helped by an improving price scenario and up spreads and confirming robust results even in an year of limited volatility. In the two key transition businesses, Enelive delivered strong biorefinery, throughput growth and excellent utilization. EBIT was hurt by the weak bioscenario, but marketing made a strong contribution. Plenitude is also contributing, continuing along its planned growth trajectory. Year-on-year EBIT was lower versus 2023, but it will beat our budget results on an yearly basis. Net debt and leverage in the quarter were both down and we remain comfortable below the top end of the planned 15-25% leverage range, despite closing only one major divestment in the quarter, while also stepping up our share buyback and paying a portion of the remaining outstanding extra profit tax balance. But as we discussed at Q2, that is not the full story. We have been advancing our portfolio activity faster and for greater value than we anticipated and planned for. Our expectation is that by year-end, pro-forma leverage will be towards the bottom of that range. Shareholder distribution remains our first priority. In September, we paid the first tranche of the annual 1 euro dividend, plus 6% versus last year. Our buyback in the quarter totalled €560 million, or 1.3% of shares in issue, which are now down 12% since we restarted the programme in 2022. As we reduce shares in issue, this adds further, along with the business performance and the balance sheet strength, to the quality and value of our dividend. With that balance sheet improvement in mind and the continuing success in our portfolio programme, we also confirm today an increase in the 2024 share buyback. We now plan to repurchase €2 billion in the programme, an increase in €400 million delivering on our raised commitment announced at Q1 and in addition reflecting the better-than-planned progress in our M&A. At today's share price, our distribution yield is 11.5%. Our efforts on growing new transition business has broader implications. It is also an opportunity to build new, highly attractive opportunities around our chemical sector. Fixing the results of this loss-making segment will be a significant contributor to the earnings and cash flow potential we see for E&I going forward and is a real priority for us. Since March, we have been developing a detailed plan, which we now want to take the opportunity to share with you. We also had the opportunity to share this with the unions. Versalis has accumulated material loss over the past years, and this negative trend has continued through 2024. Our response is one of both restructuring and transformation. The future platform of Versalis will have significantly different profiles, one focused on an high-value downstream portfolio of compounding and specialized polymers, one on biochemistry and on circular economy, a portfolio more consistent with ENI technology-led strategy focused on competitively advantaged businesses into the transition. This transformation can leverage the resource of a highly skilled workforce, but dedicate it to higher value and more sustainable activities. At Priolo, we are evaluating constructing a biorefinery for SAF and a chemical recycling plant employing our HOOP technology. At Brindisi, we target to continue polymer manufacture by using cost-advantaged imported raw materials, and we will convert part of the site to the construction of new factory facilities for the manufacturing of stationary network batteries. In the meantime, we plan to shut down cracking at both Praiolo and Brindisi. We will also look to exit or significantly reduce our exposure at Dunkirk. This is a necessary response to the structural disadvantage European basic chemicals manufacturing faces versus other regions. And we will reduce polymer capacity by ceasing polyethylene production in Ragusa. You will be aware we closed operation at Grangemort earlier this year. Further initiatives to drive efficiency in polymers might also be taken. The European chemical industry has further deteriorated in 2024, and it is not expected to improve in 2025. In this context, our expectation is to move to positive EBIT in 2027 and free cash flow breakeven in 2028. We are comfortable on the ultimate success of this turnaround as we faced similar issues over a decade ago in our refining operation. The transformation path we chose then by refining evolved into AnyLive with the resulting scale of ensuring value creation we have been able to specifically highlight today. Moving to guidance. Full year upstream production is expected around 1.7 million barrels per day, the middle of the original guidance, reflecting the expected impact of OPEC plus quotas. GGP pro forma EBIT is raised again to 1.1 billion euro, while we confirm our transition businesses to deliver EBITDA of 1 billion each. Group pro forma EBIT and cash flow from variation expectation have been reduced from Q2 on the lower scenario assumption, but reflect outward performance versus the original plan of more than 1 billion in each case. We can confirm gross cap is below 9 billion euro and net cap is well below 6. And I have already discussed the outlook for leverage. And this provides a setting for the raise by back to 2 billion for 1.6 billion and the 1.1 in the original guidance. For the purpose of modelling our cash flow for operation for the fourth quarter, you should assume dividend from associate exceeding net income by around 25%. Our relationship holds for the full year, while the cash tax rate will revert to a more normal level in the low 30s down from Q3. To summarize, Q3 represents a very good quarter amid a volatile and challenging environment. We have significantly advanced strategy, developing growth in advantageous business and securing value. We are addressing underperforming activity with the prospect of materially improving financial performance and we continue to pursue our cost reduction program that has already achieved the €300 million of savings that we planned for this year. Our recently announced reorganization reinforces our actions in each of these aspects, but critically, our financial performance continues to be highly competitive and resilient. Indeed, we are now positioned in an historically strong situation, financially and strategically, and this is confirmed in our decision to raise our 2024 share buyback. That ends my remarks, and now, together with ENI Top Management, I am ready to answer your questions. Thank you.

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