Eni's Strategic Resilience: Navigating Oil Price Volatility and Climate Litigation

In a year marked by plunging oil prices and intensifying climate litigation risks, Eni SpA (ENI.MI) has emerged as a case study in strategic resilience. The Italian energy giant's dual focus on aggressive shareholder returns and capital recycling through asset sales, paired with a legal defense strategy against climate activists, positions it as a compelling yet complex investment. For investors, understanding Eni's balancing act between profitability and sustainability is critical.

Buyback Acceleration: A Hedge Against Weak Commodity Prices

Eni's 2025 share buyback program, initially set at €1.5 billion, has already expanded into a €440 million repurchase of 32 million shares by mid-July 2025. The program's flexibility—scaling to €3.5 billion if cash flow from operations (CFFO) exceeds projections—demonstrates Eni's commitment to rewarding shareholders even as oil prices slump. With 3.9% of its shares now held in treasury, the company is effectively shrinking its capital base while maintaining a disciplined 18% net debt/EBITDA ratio.

The buybacks are underpinned by a 60% allocation of incremental CFFO, a significant jump from the previous 35%. This shift reflects Eni's prioritization of shareholder value over aggressive reinvestment in hydrocarbon projects. For instance, the recent €50 million repurchase of 3.78 million shares at €13.23 apiece highlights the company's willingness to capitalize on undervalued stock during market downturns.

Asset Divestitures: Fueling the Energy Transition

Eni's upstream divestiture strategy has generated over €2.7 billion in proceeds since 2020, with a landmark $1.65 billion sale of African oil and gas assets in 2024. These transactions, coupled with the €3.5 billion partnership with KKR for Enilive's biofuel and biomethane projects, underscore a deliberate pivot toward low-carbon growth. The proceeds from these sales are being reinvested into high-margin sectors like carbon capture and sustainable chemicals, aligning with the company's net-zero-by-2050 target.

The Enilive-KKR deal, valuing the green energy joint venture at €11.75 billion, is particularly noteworthy. It not only reduces Eni's net debt by 10% but also validates its transition strategy in the eyes of institutional investors. Meanwhile, Eni's joint venture with PETRONAS in Southeast Asia—targeting 500,000 barrels of oil equivalent per day (boepd) in LNG production by 2035—demonstrates its ability to balance traditional energy needs with decarbonization goals.

Climate Litigation: A Legal and Financial Wildcard

Eni's legal risks have escalated with Italy's Supreme Court ruling in July 2025, which allowed a climate lawsuit brought by Greenpeace Italy and ReCommon to proceed. The case, which accuses Eni of contributing to climate change through decades of fossil fuel operations, could force the company to accelerate emissions cuts by up to 45% by 2030. While Eni has filed a Strategic Lawsuit Against Public Participation (SLAPP) to counter the claims, the ruling signals a broader judicial trend in Europe to hold energy firms accountable for climate harms.

The potential financial impact is hard to quantify but could include fines, operational mandates, or reputational damage. However, Eni's low leverage and robust cash flow—bolstered by its buyback program and asset sales—provide a buffer against such shocks. The company's 5% dividend increase to €1.05 per share in 2024 further highlights its confidence in maintaining returns despite legal headwinds.

Investment Implications: Balancing Risk and Reward

Eni's strategy offers a hybrid model for investors: a resilient dividend stream and buyback-driven EPS growth, supported by capital recycling and a gradual shift toward renewables. However, the looming climate litigation and oil price volatility introduce asymmetry.

For long-term investors, Eni's disciplined leverage management (net debt-to-EBITDA below 0.5x) and diversified portfolio make it a defensive play in the energy sector. Short-term traders, meanwhile, may need to monitor the Rome court's ruling on the Greenpeace case, which could trigger volatility.

Conclusion: A Strategic Pivot in a Turbulent Era

Eni's ability to navigate falling oil prices and climate litigation hinges on its triple lever of buybacks, asset sales, and legal defense. While the company's fossil fuel legacy remains a risk, its proactive capital allocation and green energy bets suggest a credible path to long-term resilience. For investors willing to stomach near-term legal uncertainty, Eni's strategic flexibility and financial discipline offer a compelling case for inclusion in a diversified energy portfolio.

As the energy transition accelerates, Eni's story is less about resisting change and more about adapting to it—proving that even traditional energy giants can evolve in a decarbonizing world.