Eni Q2 2026 Earnings Call Transcript

Eni (NYSE: E ) released second-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below. This content is powered APIs. 5 billion euro cash flow from operations, up over 60%.

The company highlighted its resilience amidst geopolitical volatility, focusing on geographic diversification and proprietary technologies. Key strategic initiatives include expanding in Asia and South America, enhancing low-carbon energy platforms, and executing major upstream projects. Notable operational success included 8% reported production growth, with new exploration successes in Angola, Côte d'Ivoire, Libya, Egypt, and Indonesia. 4 billion euro of shares, with a potential special dividend linked to oil and gas prices.

The company emphasized a dual growth strategy in traditional and low-carbon energy, with a robust project pipeline and strategic partnerships, including a joint venture with Mercuria for trading. Eni addressed ongoing negotiations and potential new contracts in Venezuela, while also enhancing its infrastructure and refining capacities. Full Transcript Francesco Gattei — Chief Transition and Financial Officer Thank you. Good morning.

Good afternoon for being with us today. Our second quarter and first half result clearly reflect our successful execution of the strategy and the objectives we have consistently communicated. 5 billion euro of cash flow from operations, up over 60%. This growth significantly outpaced the increase in Brent prices over the same period, demonstrating the strength of our operating leverage and our ability to absorb a highly unfavorable foreign exchange environment.

Looking at the first half of the year, we delivered a remarkable 40% year on year increase in pro forma EBIT. Reported gearing remained stable quarter on quarter, while pro forma gearing declined to 10%, reaching the lower end of our target range. Overall, this performance reflects excellent operational execution, effective capture of market opportunities, and the continued delivery of our consistent strategy. The first half of 2026, marked by the emergence of a new crisis in the Gulf, has once again exposed our industry to extraordinary volatility.

Yet Eni has demonstrated its ability to effectively mitigate external pressures. Our resilience is underpinned by a broad geographic diversification, strong operational efficiency, and the deployment of proprietary technologies. At the same time, our robust organic growth continues to be fueled by our outstanding exploration successes and a deep pipeline of developing opportunities. Most importantly, our growth is increasingly multidimensional.

While exploration and production remains our highly competitive core business, we are rapidly scaling attractive growth platforms right across the energy value chain. Specifically, I would like to highlight three key pillars of our strategy. First, diversification. We are well diversified across geographies, businesses, and technologies.

While some of our operations have been affected by events in the Middle East, the overall impact has not been material. Actions taken in 2026 have further strengthened this diversification, increasing our exposure to Asia and South America, expanding our transition-related businesses, and opening new opportunities in trading activities, critical minerals, and stationary batteries. Second, growth. We continue to deliver a unique double engine of growth, combining industry-leading organic upstream production with a rapid parallel expansion in low-carbon energy.

Third, financial performance. We continue to generate outstanding financial results, with over 60% of our original plan targets already met year to date. Also, thanks to the fast time to market of our project, our satellite model, increasingly acknowledged as a material positive differentiator for Eni, continues to de-risk the balance sheet, attracting third-party capital to fund our expansion across new technologies and geographies. Turning to upstream, we delivered an outstanding 8% year on year reported production growth in the first half of the year, or 11% underlying.

We fully offset Middle East volume losses thanks to the efficient execution of major operating projects, including AGO in Angola, Amoca in Mexico, Congo LNG Phase 2, as well as a strong contribution from World Energy. This growth is entirely organic and reflects investment and exploration successes achieved over several years. As discussed during Q1, our unique to 2026 exploration performance has added over 1 billion barrels of new resources, supported by credible development pathways.

This success is driven by key discoveries including Al Qaeta 01 in Angola, Muren South 1 in Côte d'Ivoire, two offshore gas discoveries near Bar Es Salaam in Libya, the Dhimi's discovery offshore Egypt, and the giant Galiga 1 gas condensate discovery in Indonesia. We have further refreshed our future pipeline with new acreage positions in Uruguay, Timor Leste, and the Gambia. Furthermore, to secure our medium-term production capacity during the planned period, we have sanctioned three major projects: Balen Phase 3 in Côte d'Ivoire, Genk North in Indonesia, and Kronos in Cyprus.

Beyond this project, we are reshaping our global footprint through the build up of two diversified regional clusters in Asia. The Sierra business combination completed in June created our largest satellite platform to date and established a leading player in the Pacific region. Initial production exceeded expectations, surpassing 300,000 barrels per day and backed by 3 billion barrels reserves. Upside, it has a clear path to approach 800,000 barrels per day by 2030.

In the Americas, we continue to advance significant opportunities in Argentina and Venezuela, which together with our existing position in Mexico and the United States represent an increasingly important component of our upstream portfolio. In detail, in Venezuela we are finalizing a negotiation for new contracts for Junín 5 and CoroCoro. Simultaneously, we have finalized the gas export agreement for the giant Perla field. 5 billion barrels of recoverable resources.

8 billion barrels. The new material initiatives in Argentina, Venezuela, East Asia, together with our African portfolio provide absolute confidence in our long-term trajectory. As a result, we now expect production growth to be around 4% CAGR guidance through 2030, while we are also developing a unique visibility on a further wave of growth opportunities beyond 2030. Importantly, through portfolio high grading and strategic moves like our recently announced Mercurial joint venture, this volume growth will translate directly into cash flow, underpinning our primary target: growing our upstream free cash flow per barrel by more than 50% by 2030.

Our Q2 results demonstrate Eni's ability both to capture favorable market conditions and to enhance underlying profitability. E&P delivered outstanding production growth and successfully captured the benefits of the market environment, with particular strong contributions from Norway and Congo. 4 billion euro. We also see additional upside potential in the second half supported by current pricing conditions and inventory replenishment dynamics.

4 billion euro. Within transformation businesses, refinery utilization recovered following the major turnaround activities completed during the first half. Versalis also continued to reduce losses in line with the improvement plan, also supported by better market conditions. Contribution from associates benefited from supporting macroeconomic conditions and the consolidation of Sierra from June onward.

The first half tax rate of approximately 39% was below our full-year guidance, reflecting the impact of high grading upstream production, the accounting impact of satellite, the transition toward a more sustainably diversified overall income mix, and the benefit of our restructuring and performance improvement initiatives. Cash flow from operations remains strong, supported by dividend contribution from associates and continued working capital improvement. Operational working capital generated a positive contribution in the quarter, and we continue to expect an overall reduction throughout 2026.

8 billion euro in Q2, and we continue to expect approximately 7 billion euro of gross capex for the full year, while we also reduced the net figure to below 5 billion euro. We paid the fourth and final quarterly dividend related to 2025 and repurchased 600 million euro of shares. Since 2021, outstanding shares have been reduced by around 18%. 4 billion euro of shares in the 2026 program, representing a combined yield to our investors of around 10%.

Pro forma gearing at the quarter end remained at 10%, the lower end of our target range, and we expect reported gearing to converge toward that level by year end. In conclusion, the combination of our upstream positioning and growth outlook, our integration across the entire energy value chain, the increasing value creation from our transition businesses, and our strong financial foundations position us competitively in a world that has entered a new energy paradigm. It is confirmed by the revised guidance for most of our businesses that translate into an increased distribution underlying oil and gas production.

Growth is now seen exceeding 5%, above the upper end of the previous range. 4 billion euro, plus 40% compared with the initial level. 4 billion euro. 5 billion euro at the budgeted cash flow.

The potential special dividend related to oil price above $90 per barrel or gas price and serum margin more than 50% of the original budget's assumptions will be determined in the last quarter. In this environment Eni is in one of the strongest positions in its history. That concludes my remarks, and together with my colleagues from Eni's management team I am ready to take your question. Thank you.

OPERATOR Thank you. This is the conference operator. Please press star and one for your questions and star two to remove yourself from the question queue. I now leave the floor to Mr.

John Rigby for the Q&A session. John Rigby — Investor Relations Thank you, and thank you everybody for attending. We're going to go through this in polling order again. I'd ask you to keep your questions to two, if that's okay, and we'll aim to finish the call around the top of the hour.

We'll start with Alejandro Vigil at Santander. Alex? Alejandro Vigil — Analyst at Santander Yes. Thank you for taking my questions.

The first question is about the guidance about production. Definitely this year looks very strong also with the Sierra consolidation. If you can give us numbers about the outlook of 2030 of production, just to have some indication of the range of potential volumes that year. And the second question is about the European natural gas market.

You mentioned that in the guidance for global gas and LNG you are not including any upside from the current situation. If you can elaborate about how you see the second half of the year. Thank you. John Rigby — Investor Relations Thank you.

For production outlook, I think Guido will take over that question. Is Christian there to give you an update on gas in the second half, as you asked? Guido Brusco — Chief Operating Officer, Global Natural Resources Yeah. So on production, of course you notice that we have improved our guidance in 2026.

Originally we provided a range of 3 to 4% growth underlying, which now increased to 5%. And this is coming from a higher contribution from some country like Libya, Mexico, Kazakhstan, and of course the anticipation of the business combination in Sierra. While for the 2030 we have also provided a stronger support to our originally provided guidance. And you have noticed that we have accelerated some major FID.

We have included some projects which initially were beyond 2030 and that we have now anticipated to the 20. Claudio Descalzi — Chief Executive Officer So just to give some more color on our production, if we look at all the projects that were in our slide, we have 54 projects. They're coming from our organic growth, our exploration, something that is coming from the exploration we performed in the last 10 years. And most of these projects are already in a very advanced stage.

Some we took the FID, some are really in execution and most of them are with the POD done. So that is going to give the 4% we said by 2030 and is going to confirm a solid growth also after 2030. So when it comes to the gas market scenario for the second half, I would say our scenario is currently in line with the forward curves, as you can see. But I think we can say that the situation is fairly fragile given the geopolitical situation and, let's say, delay in the replenishment of the European storage.

So we think that depending clearly on the evolution of the situation, we can see upside potential in terms of volatility and flat price numbers when it comes to the second half. And I think the idea is that we are ready clearly with our assets to take advantage of that situation. That's it. John Rigby — Investor Relations Thanks, Alex.

We can now move on to Biroj Bhagataria at RBC. Biroj, are you there? Biroj Bhagataria — Analyst at RBC The first was just on Venezuela, which you touched on in your initial remarks. There were some reports recently that the government had presented new terms to the industry.

I was wondering if you thought those were sufficient to drive investment beyond 2027 and 2028 and see more on the oil side than the gas side. And then the second question is just on refining. The strength in the downstream has been a big theme this quarter. I know you don't have a huge amount of exposure to this, but I just noticed your indicator was down quarter on quarter.

I guess we're looking at the cracks on the screen which are very strong. So could you just help me understand, you know, why you're not able to take advantage of that and how we should think about that kind of going to the second half. Thank you. Claudio Descalzi — Chief Executive Officer So Venezuela, now, if maybe Guido can complement what I'm going to say.

Venezuela, we are in negotiation, I think very, very open, clear and transparent. Very good negotiation. We are discussing very well with the Minister, with PDVSA, clearly also with our American partners. And you know, we have big potential, as we said, we have one of the best blocks.

We have Corocoro, we have Perla, for which we already signed a contract that has been very, very, very quick. A couple of months ago we signed a contract for export that is very good because it's going to complement our domestic production and that gives even more breadth and more space for future investment. As you know, we already developed most of the infrastructure for the second phase. So we can really go fast for the second phase and then put in place a floating LNG for export.

So up to now Venezuela is responding very well. Clearly we are going to negotiate a contract that allows us to make investments. We have to remember the history of this country. It's not that we forgot what we had in the past, so we are prudent.

But I think that what happened until now is encouraging us to go ahead with our Venezuelan partner, with PDVSA and the Minister. Just to talk about SERM, I like that. Maybe Francesco says something about SERM and then, if there is anything to add for Venezuela or in general for downstream, Pino can add something. And Stefano Ballista, if there is something for the biofuel refineries.

Giuseppe Ricci — Industrial Transformation Chief Operating Officer Yes, about our benchmark refining margin. Clearly this benchmark is a nominal value that is representing a status that is a normalized status of the market. So it takes into account the crudes that are generally imported in our refineries, takes into account the freight costs that are normally assumed for this transportation and for these logistic events. The situation that we faced since March is completely, let's say, out of normal.