Eni S.p.A. 2026 Production, LNG FID Timelines Show Earnings Call Contradictions

Date of Call: Feb 26, 2026

Guidance:

• Gross CapEx for 2026 limited to around EUR 7 billion, net CapEx at around EUR 5 billion.
• Pro-forma gearing in 2026 expected to remain at historically low levels, between 10% to 15%.
• Shareholder distribution details to be confirmed at Capital Markets update; a full funded attractive and growing dividend is the first priority.
• Upstream production growth driven by recent project start-ups and new developments, with more details to be provided in March.

Business Commentary:

Upstream Production and Project Execution:

• Eni achieved an underlying production increase of 4% in 2025, exceeding their original target and representing growth above 7% since 2022.
• This success was driven by the startup of six major projects, strong project execution, and new field developments in countries such as Angola, Congo, and Indonesia.

Financial Performance and Cash Flow:

• Eni reported a CFFO of EUR 12.5 billion, EUR 1.5 billion ahead of plan on a scenario-adjusted basis.
• This was due to robust financial management, cost-cutting measures, and successful portfolio activities that generated significant cash.

Energy Transition and Growth:

• Transition activities generated EUR 2 billion of EBITDA, with strong contributions from Plenitude and Enilive.
• This growth was supported by a focus on diversifying and strengthening earnings through renewable energy and biofuel projects.

Portfolio Optimization and Value Creation:

• Eni completed more than EUR 6.5 billion in portfolio valorization activities in 2025.
• The company focused on high-grading its production portfolio through new project developments and the divestment of late-life assets.

Sentiment Analysis:

Overall Tone: Positive

• "2025 was a year of exceptional progress at Eni." "Last year's result proved the value of our consistent strategies, strong operational and financial performance." "Project execution is a clear strength of ours." "We delivered EBIT above EUR 1 billion for the fourth consecutive year." "We improved the robustness of our integrated business models, and we have been rewarded with strong earnings."

Q&A:

• Question from Alejandro Vigil (Banco Santander): Potential increase in production driven by the Petronas joint venture and view on the situation in Kazakhstan.
  Response: Petronas contribution expected in 2nd quarter 2026, with more detail in March; initial production of ~300k boe/day, with potential to reach 500k boe/day via new projects. Regarding Kazakhstan, positive outlook; arbitration claims ongoing, but Eni believes operations were compliant and is challenging claims in court.

• Question from Michele Della Vigna (Goldman Sachs): Bridge between 2026 CapEx guidance of EUR 7 billion and prior figures, and priorities for FID in 2026.
  Response: CapEx reduction achieved through exploration efficiency, low unit development cost projects, and longer plateau production. For 2026 FID, focus on Argentina, Ivory Coast, Cyprus, and other African geographies.

• Question from Biraj Borkhataria (RBC): Impact of Indonesia deconsolidation on 2026 CapEx and CFFO, and update on Versalis EBIT outlook.
  Response: Indonesia deconsolidation impact on 2026 CapEx will not be very large as FID mainly in 2027. For Versalis, positive impact from cracker shutdowns seen in 2nd half 2025 and early 2026, with further actions ongoing; full plan to be shared at next update.

• Question from Lydia Rainforth (Barclays): Current exploration success rate and benefits/plans around AI.
  Response: 2025 exploration success rate exceptionally high, near 100%. AI being applied across business, including a new data center business line in Italy, with potential for significant impact on production, drilling, and project efficiency.

• Question from Irene Himona (Bernstein): Changes to high-grade production, upstream tax rate for $65-$70 Brent, and split of discovered resources between gas and liquids.
  Response: High-grading involves bringing onstream high-CF-per-barrel projects and divesting late-life assets, resulting in 10% increase in free cash flow per barrel. Upstream tax rate for 2026 expected 45-50% assuming $62 Brent, lower if price improves. Resource split is 70% gas, 30% oil.

• Question from Joshua Eliot Stone (UBS): Impact of Italian energy reform and thought process behind buyback sizing.
  Response: Energy reform impact slightly negative but marginal due to Eni's dual exposure as producer and industrial player. Buyback set using $62 oil price deck; it is the variable component of distribution, historically raised alongside dividend, to share upside with investors.

• Question from Matthew Lofting (JPMorgan): Factors behind net debt/gearing targets and upside potential in Venezuela.
  Response: Gearing target driven by operational performance, cash flow, CapEx efficiency, and satellite model (potential for Plenitude deconsolidation among options). Venezuela presents multiple upsidess: recovering gas via crude payment, developing oil blocks to recover past costs, and potential gas exports to Europe.

• Question from Martijn Rats (Morgan Stanley): Thoughts on revitalizing oil trading business and partnerships.
  Response: Initiated journey to improve trading by creating a single organization, adopting less risk-averse approach, and engaging in dialogues with international trading partners.

• Question from Massimo Bonisoli (Equita): Impact of higher net M&A on portfolio options and outlook for biofuels in 2026.
  Response: Net M&A upside expected to provide more portfolio opportunities, consistent with strategy of leveraging successful exploration and valorization. Biofuels demand in 2026 estimated above EUR 20 million, driven by EU RED III and U.S. EPA targets, with improving margins as RIN banking trends reverse.

• Question from Mark Wilson (Jefferies): Key third-party areas (e.g., drilling, E&C) that have improved to assist upstream delivery.
  Response: Core capability stems from in-sourcing key competencies over 15 years, increasing R&D investment, and developing proprietary technology, leading to faster time to market and reduced downtime versus industry average.

• Question from Paul Redman (BNP Paribas): Roll-over of 2025 cash initiative benefits into 2026 and allocation of cash flow to shareholders.
  Response: Most cash initiative benefits are one-off factors that may roll over; Eni continues to search for additional cash management upside. Cash flow from operations remains the priority reference for shareholder distributions, with percentage to be finalized at next Capital Markets update.

• Question from Alastair Syme (Citigroup): Views on European carbon scheme (ETS) and update on Libya offshore well.
  Response: ETS is viewed as a tax impacting European industrial competitiveness; no direct comment on political change. Libya offshore exploration well currently drilling, results to be announced when available.

Contradiction Point 1

2026 Production Growth Outlook

It involves differing narratives on the progression of production growth for 2026, impacting strategic planning and investor expectations regarding company output.

Alejandro Vigil (Banco Santander, S.A., Research Division) - Alejandro Vigil (Banco Santander, S.A., Research Division)

2025Q4: The company confirms an underlying production growth of 3% year-on-year for 2026, though growth may not be progressive due to projects cycling on and off. - Guido Brusco(COO)

Can you elaborate on the production outlook for 2026 from the joint venture with Petronas and comment on the situation in Kazakhstan? - Alessandro Pozzi (Mediobanca)

2025Q3: The company confirms an underlying production growth of 3% year-on-year for 2026, incorporating new projects, M&A, and the JV with Petronas, offset by field declines. - Guido Brusco(COO)

Contradiction Point 2

Cash Initiative and Buyback Details

It involves differing statements on the timing and structure of the 2026 share buyback, affecting investor understanding of capital return strategy.

Joshua Eliot Stone (UBS Investment Bank, Research Division) - Joshua Eliot Stone (UBS Investment Bank, Research Division)

2025Q4: The buyback amount is set using a $62 oil price deck for 2026, but details will be finalized and announced at the Capital Markets Day in March. - Claudio Descalzi(CEO)

Could you comment on the impact of the new Italian energy reform and discuss the rationale and sizing of the 2026 buyback in the context of the stock re-rating? - Biraj Borkhataria (RBC Capital Markets)

2025Q3: The buyback increase reflects Eni's ability to share upside... The policy is to announce buybacks during Capital Market Days and adjust based on execution. - Francesco Gattei(CFO)

Contradiction Point 3

Upstream Tax Rate Guidance

It involves conflicting guidance on the upstream effective tax rate for 2026, impacting financial forecasting and investor analysis.

Irene Himona (Bernstein Institutional Services LLC, Research Division) - Irene Himona (Bernstein Institutional Services LLC, Research Division)

2025Q4: For 2026, with an assumed Brent price of $62, the upstream effective tax rate is expected to be in the range of 45% to 50% (lower if price improves). - Guido Brusco(COO)

Could you please explain what "high-grade" production means, provide the expected upstream tax rate for $65-$70 Brent, and give the split of the 10B BOE discovered since 2014 between gas and liquids? - Irene Himona (Sanford C. Bernstein)

2025Q3: The improved cash tax rate (~28–29%) and P&L tax rate (~46–48%) are due to structural changes... This transformation enables higher value retention and is expected to continue. - Francesco Gattei(CFO)

Contradiction Point 4

Argentina LNG Project FID Timeline

It involves differing timelines for a key project decision, affecting strategic priorities and investor perception of execution pace.

Michele Della Vigna (Goldman Sachs) - Michele Della Vigna (Goldman Sachs)

2025Q4: The primary FID focus for 2026 is on the Argentina LNG project. - Claudio Descalzi(CEO), Guido Brusco(COO)

Can you explain the bridge between the 2025 gross CapEx of €8.5B and the 2026 guidance of €7B, and prioritize FID opportunities for 2026 given the wealth of new projects? - Henry Michael Tarr (Joh. Berenberg, Gossler & Co. KG)

2025Q2: Key steps... and project financing with YPF, expected to be completed by year-end or early 2026. - Guido Brusco(COO)

Contradiction Point 5

Capital Expenditure (CapEx) Outlook and Flexibility

It involves contrasting views on the ability to adjust capital spending in response to market conditions, impacting financial planning and risk assessment.

What are your main questions for Michele Della Vigna (Goldman Sachs) regarding the earnings? - Michele Della Vigna (Goldman Sachs)

2025Q4: The reduction in gross CapEx from €8.5B to €7B for 2026 is due to improved efficiency... This allows for growth with less capital. - Claudio Descalzi(CEO), Guido Brusco(COO)

Can you explain the bridge between the 2025 gross CapEx of €8.5B and the 2026 guidance of €7B, and prioritize FID opportunities for 2026 given the wealth of new projects? - Biraj Borkhataria (RBC)

2025Q1: There is flexibility to adjust CAPEX in response to a further deterioration in the scenario. The company has identified over €2 billion in initial actions to enhance free cash flow... - Francesco Gattei(CFO)