MILAN, March 19 (Reuters) - Italian energy group Eni said on Thursday it was deconsolidating its retail and renewable energy unit Plenitude through a shareholding reorganisation and a new governance
Eni sees extra dividend if oil surge from Iran crisis persists
Eni's Financial Strategy Amid Oil Price Surge
By Francesca Landini
MILAN, March 19 (Reuters) - Italian energy group Eni said on Thursday it was raising the top end of its distribution range for the next five years and would pay an extraordinary dividend if energy prices exceed its forecast.
Extraordinary Dividend Policy
The state-controlled company pledged to distribute 100% of additional cash flow through an extra dividend if annual average Brent exceeds $90 per barrel or gas prices or refining margins rise by 50% compared with Eni's current expectations.
The conflict in Iran has triggered a more-than-40% rise in Brent to above $100 per barrel, and without a resumption of oil and liquefied natural gas traffic through the Strait of Hormuz analysts see no significant easing of energy prices.
Impact of Iran Crisis on Eni Operations
No Stranded Tankers in Hormuz
NO STRANDED TANKERS IN HORMUZ
The impact of the disruptions in Hormuz on Eni's activities has so far been "not so big", Chief Executive Claudio Descalzi said in an analyst call, adding that the group has no tankers stranded in the region.
Updated Strategy and Distribution Targets
In its updated strategy, the company said it would increase its distribution payment to 35-45% of cash flow from operations (CFFO) in 2026-2030, from a previous 35-40%.
This will translate this year into a 5% increase of its dividend and a share buyback of at least 1.5 billion euros ($1.73 billion), it said.
Hydrocarbon Production Growth
The new targets are founded on growth in reported hydrocarbon production envisaged at 3-4% per year through 2030.
This will be generated by a wide range of projects including an upstream joint venture with Petronas in the Far East, and the development of LNG operations in Mozambique and Congo.
In addition, Eni said it expects to approve a major LNG project in Argentina this year, partnering with Buenos Aires-based YPF and Abu Dhabi's XRG.
"The bulk of our hydrocarbon output growth will be on LNG," said Guido Brusco, the group's chief operating officer for natural resources.
Cash Flow and Financial Outlook
Descalzi said Eni would be "significantly more cash generative by 2030," thanks partly to "continued cost reduction and performance improvements across our other businesses."
CFFO is expected to reach around 17 billion euros by 2030, the company said.
The debt-to-equity ratio, or gearing, will remain in a range of 10-15%, after declining last year to 14%.
Investments and Plenitude Reorganisation
Investments Seen Lower in New Strategy
INVESTMENTS SEEN LOWER IN NEW STRATEGY
Investments over the period plan are expected to average less than 6 billion euros per year, about 2 billion lower than under the previous strategy, thanks to efficiency gains and the deconsolidation of some activities.
Plenitude Shareholding and Governance Changes
Eni said it was taking its retail and renewable energy unit Plenitude off its balance sheet through a shareholding reorganisation and a new governance structure.
The transaction, on which Eni was advised by Mediobanca, involves a non-proportional capital increase of around 1.5 billion euros, of which at least 1 billion is expected to be provided by asset manager Ares, already an investor in the unit.
Following the capital increase, Eni will have a equity stake of close to 65% in Plenitude.
($1 = 0.8693 euros)
(Reporting by Francesca Landini, editing by Gavin Jones)
