Italy's Eni Promises Richer Returns After Higher Growth

Italy's Eni Promises Richer Returns After Higher GrowthItaly's Eni Promises Richer Returns After Higher Growth

Italian oil major Eni hiked its dividend on Friday and held out the prospect of a share buyback after promising higher growth in production and more cash.

Eni was the first oil major to cut its dividend three years ago after a steep decline in the oil price forced the industry to tighten its belt, Reuters reported.

But as crude prices recover, the focus of the world’s biggest oil companies is slowly shifting from slashing jobs and investment to boosting shareholder returns and growth.

So far this year, Total has raised dividends, BP flagged a resumption of share buybacks and Shell scrapped its scrip dividend.

State-controlled Eni said in its new business plan to 2021 that it would pay a dividend this year of $1.02 per share, 3.7% more than last year. It also said a share buyback remained an option to distribute excess cash.

“All the work of the last three-four years is finally paying dividends. It’s a much better company now,” said Alessandro Pozzi, oil analyst at Mediobanca.

Eni, the world’s most successful explorer in recent years after finds in Egypt and Mozambique, said it would not be cutting investments, spending almost €32 billion over the duration of the plan.

It said it aimed to increase production by 3.5% per year, up from a 3% target in its previous plan. Output would grow by 4% this year.

“During the downturn, we tripled our acreage and this is the big potential Eni has,” Chief Executive Claudio Descalzi said.

The company, the biggest foreign oil and gas producer in Africa, will add 2 billion barrels of new oil and gas production over the next four years with free cash flow from its upstream operations totaling €22 billion.

Since taking over as CEO in 2014, oil veteran Descalzi has streamlined the company, sharpening its focus on finding oil and gas.

“We will be making the final investment decision on five key projects this year,” added Chief Financial Officer Massimo Monduzzi.

The discovery of two world-class gas fields in Mozambique and Egypt added 115 trillion cubic feet of resources to its portfolio, opening up opportunities in liquefied natural gas.

It is working with Exxon on LNG development at its giant mamba field in Mozambique, and said the group aimed to increase LNG sales to 12 million tonnes per year by 2021 and 14 MTPA by 2025.


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