Letter to shareholders
In 2017 Eni delivered outstanding results proving the effectiveness of our deep transformation process started in 2014. As a result of this, the Company is now on a strong footing and is able to create value even in the most difficult market conditions, such as the last price downturn that was among the most severe ever affecting the oil&gas industry.
In the last three years, we have grown our core upstream business and have substantially completed the turnaround process of our mid-downstream businesses, which in the past were unprofitable and cash-negative, while retaining a strong focus on the robustness of the financial structure.
These results helped us reduce our target Brent price of cash neutrality target to 57 $/bbl, 50% lower than the price that allowed us achieve in 2014 full coverage of capex and cash dividend with funds from operations.
Therefore, Eni is currently much more resilient in case of depressed market conditions, while it would be able to generate substantially greater results and cash flows should the commodity environment strengthen.
The upstream segment was boosted by exploration successes, which for the 10th 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.
Chief Executive Officer and General Manager
All in all, the actions identified in the industrial plan will underpin a strong cash generation and a reduction in the Brent price for the organic cash neutrality, after paying capex and dividend.
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.