The upstream segment was boosted by exploration successes, which for the 10^th year in a row, delivered outstanding results, once again reaffirming our distinctive skills and know-how.

We added 1 billion boe of equity resources to our portfolio, of which 800 million boe from exploration, at a competitive unitary cost of 1 $/boe.

Since 2014, additions to the Company’s resource backlog were approximately 4 bboe, almost doubling production level of the full period.

Our exploration effort has been equally split between near-field initiatives aiming at quickly supporting production and cash flows leveraging on the proximity to our existing producing facilities and the higher-risk exploration of material resources in new areas or in unexplored geological layers. The results were extraordinary, which underpinned the execution of our Dual Exploration strategy intended to dilute the high working interests retained in exploration assets, with a view of anticipating reserves monetization.

We expect to speed up the development of renewable sources business, planning 2018-2021 capex for more than €1.8 billion, including the R&D expenditure, to reach an installed capacity of 1 GW at the end of the plan period.

The industrial projects in the R&M and Chemicals segments are all targeting to reach a higher level of energy efficiency and strengthen the green platform. These actions, together with the increasing role played by natural gas in Eni’s portfolio and the steady reduction in the average price break-even price of upstream projects, will confirm the resiliency of our portfolio even in more conservative energy scenarios.

Prioritising the environment and safety

We launched a process of transformation that has seen us restructure Mid-Downstream, strengthen our Upstream business and above all invest funds in research and technology to protect both people and the environment.

A transformation that has made us stronger

Over the past four years, our company has become more streamlined and robust as the result of an integrated strategy that has created value for shareholders by focusing on a diverse range of business areas.

Adjusted results

Adjusted operating profit more than doubled to €5.80 billion (up by €3.49 billion vs. 2016), adjusted net profit of €2.38 billion compared to the loss reported 2016. This recovery in profitability was underpinned by the implementation of strategic drivers focused on upstream profitable growth, the turnaround and cost efficency initiatives in the mid-downstream business, leveraging on the scenario recovery.

Upstream

Adjusted operating profit doubled vs. 2016 to €5.2 billion.

Turnaround in the mid-downstream

Adjusted operating profit increasing by €1 billion in 2017:

• G&P: operating profit structurally positive a year ahead of plans;
• R&M: break-even refining margin below of 4 $/bbl and operating profit at record level from last eight years;
• Versalis: all-time best operating performance.

Net capital expenditure

€7.6 billion, reducing by 18% vs. 2016.

Self-financing ratio of net capex at approximately 130%.

Cash neutrality

Organic cash neutrality covering capex and dividend at a Brent price of 57$/bbl; 39$/bbl, factoring in proceeds from disposals.

Gearing and Leverage

Eni confirms a solid financial structure with a gearing of 18%, the lower end of the European peer group and a leverage of 23%, leveraging on the excellence in operating cash flow generation, capex optimization and gains from disposals.

Dividend

The Company’s robust results and strong fundamentals underpin a dividend distribution of €0.80 per share of which €0.40 per share paid as interim dividend in September 2017.

Dual Exploration Model

Closed the 40% disposal of the super-giant Zohr gas field in Egypt offshore – through two different transactions with BP (10%) and Rosneft (30%) – and the 25% disposal of Area 4 in Mozambique to ExxonMobil. In March 2018, signed an agreement with Mubadala Petroleum for the divestment of a further 10% interest in Zohr.

Hydrocarbon production at record level

1.82 million boe/d, the highest ever level, with a 5.3% growth vs. 2016. Start-ups and ramp-ups additions of 243 kboe/d leveraged on Eni’s exploration and development integrated model, designed to optimize new projects’ time-to-market (Zohr in Egypt, East-Hub in Angola, OCTP in Ghana, Jangkrik in Indonesia, all in 2017) and on accelerate fields ramp-ups (Noroos).

Zohr development

Achieved production start-up at the super-giant Zohr gas field in record time-to-market: in less than two years from the FID and two and a half years from discovery.

Exploration resources

In 2017 added 1 bln boe of new resources, of which 0.8 bln boe from in house exploration with a discovery cost of approximately 1 $/bbl.

Mexico

Successfully completed the exploration campaign offshore Area 1, thanks to the appraisal of Tecoalli discovery which followed that of Amoca and Miztòn, resulting in a rise in estimated hydrocarbons in place of the Area to 2 bln boe, of which approximately 90% oil. Scheduled a fast-track development plan.

Exploration portfolio

Reloading of approximately 97,000 square kilometers of new acreage:

• awarded 50% of the mineral rights of the Isatay Block in the Kazakh Caspian Sea;
• signed an Exploration and Production Sharing Agreement (EPSA) of Block 52, offshore Oman;
• acquired new exploration licenses in Morocco, Mexico, Cyprus and Ivory Coast.

Proved hydrocarbon reserves

7 billion boe with an organic replacement ratio of 103%. The ratio increases to 151% when excluding the reclassification of PUD reserves to the unproved category in Venezuela in accordance with the applicable US SEC regulation.

Coral project

Sanctioned by the partners the development project for the exclusive reserves in Area 4 in Mozambique amounting to 16 TCF in place. The Floating LNG facilities construction will be realized through a multi-source project financing of $4.7 billion.

International development in the Chemical business

Completed, in South Korea, the construction of the industrial complex for production of premium elastomers, leveraging on Versalis technology and through the 50:50 joint venture Versalis – Lotte Chemical, local operator.

Licensing EST technology

Enhanced the refining know-how through two licensing agreements with the Chinese companies Sinopec and Zhejiang

Petrochemicals for the use of the Eni Slurry Technology (EST) conversion proprietary technology.

Renewable energies

Eni’s committment for renewable energies was implemented by the start-up of operations for the set-up of plants in Italy and Algeria and the development of other initiatives in Italy and abroad. Signed the collaboration agreement with General Electric and with the Kazakh Ministry of Energy; finalized a Memorandum of Understanding with the Egyptian Ministry of Electricity to jointly realize new renewable plants.

Safety of Eni’s people

Total recordable injury rate (TRIR) reported a decrease of 6.8% vs. 2016. The reduction for the employees (down by 17.2%) and the contractors (down by 2%) was driven by specific program of education and awareness addressed to Eni’s people. In 2017, was launched the new Safety Training Center in Gela for training in health, safety and environmental issues.

Climate change

Accordingly to Eni’s carbon footprint reduction strategy, the development program on renewables was implemented by 20 projects on an executive phase or near to FID, which will contribute to increase Eni’s generation capacity by around 250 MW. Furthermore, Eni is part of the TCFD (Task Force on Climate-related Financial Disclosures) of the Financial Stability Board, targeted to a more trasparent disclosure about risks and opportunities relating to the climate change.

Commitment to flaring reduction

Eni joins the Global Gas Flaring Reduction Partnership (GGFR), sponsored by the World Bank, a public-private initiative involving international oil companies, governments and international institutions. Eni reduced gas flaring of approximately 68% in the last ten years and promoted access to energy for over 18 million people in the Sub-Saharan Africa.

GHG emissions

GHG emissions increased by 2.5% vs. 2016 due to the production growth. GHG emission index per barrel produced was down by approximately 3% vs. 2016 and by 19% vs. 2014 in accordance with the long-term target of a 43% reduction by 2025.

Oil spills due to operations

Oil spills due to operations (higher than one barrel), 94% of which relating to the E&P segment, more than doubled from 2016. This was mainly due to the spill from a tank located in COVA in Val d’Agri where the Company implemented all the remediation actions to reduce the environmental damage and to prevent any future accident through infrastructure upgrading.

Human rights

Started in 2017 the working group on Human Rights in the business supported by the Danish Institute for Human Rights. The comparison between Company’s processes and the International Standards (UN Guiding Principles on Business and Human Rights) allowed the definition of a roadmap aimed at further improvement of Eni’s performance on Human Rights.

Renewing our commitment every day

Eni’s people work in 71 different countries around the world to guarantee high quality standards in all the energy company’s operations, from technological research and offshore activities to planning and selling energy sources.

Eni's portfolio of conventional oil assets with a low break-even price reference as well as the quality of the resource base with options for anticipated monetization represent the competitive advantages of Eni's upstream business. The large presence in the gas and LNG markets and know how in the refining business enable the company to catch joint opportunities and projects in the hydrocarbon value chain. Eni's fundamentals, such as the high portion of gas reserves and the opportunity to grow in the renewable sources segment leveraging on synergies with Eni's industrial plants, will sustain the path of the business model to a low carbon scenario.

Value chain

UPSTREAM

Eni engages in oil and natural gas exploration, field development and production, mainly in Italy, Algeria, Angola, Congo, Egypt, Ghana, Libya, Mozambique, Nigeria, Norway, Kazakhstan, the UK, the United States and Venezuela, overall in 46 countries.

MID-DOWNSTREAM

Eni sells gas, electricity, LNG and oil products in the European and extra-European markets, also leveraging on trading activities. Products availability is ensured by oil and gas production in the upstream business, long-term gas supply contracts, CCGT power plants, Eni’s refinery system as well by Versalis’ chemical plants. The supply of commodities is optimized through trading activity. Integrated business units enable the company to capture synergies in operations and reach cost efficiencies.