credit suisse 2007 oil & gas conference · credit suisse 2007 oil & gas conference marco...
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Eni’s Growth Strategy
E&P:Increase production, replace reserves and build a global LNG position
G&P:Grow internationally and preserve Italian gas business
R&M:Enhance refining profitability and marketing network
Technolo
gy
Op
era
tio
na
l E
ffic
ien
cy
3
E&P: Long Term Growth
Large and diverse resource base
Exposure to world leadingprojects
Renewal of explorationportfolio
Technology partner withNOCs
Building a global LNG business
Uniquely integrated business model
Existing PortfolioFuture developments & opportunities
Reserve replacement ratio>100 2007-2010
EnhancingE&P and G&P integration
EnhancingE&P and G&P integration
Production growth - CAGR 2006-10From 3% to 4% post 2007 asset acquisitions
4
12.1 10.8 10.0
Proved Reserves and Resources
2005 2006
6.46.87.2
2004
Organic Reserves Replacement2004-06 at 40 $/bl:
106%
65
23
105
38
4091
40.5 58.2 58.9
Proved Reserves(SEC rules)
* Proved + Unproved Reserves + Risked Exploration
Proved Total*Proved+Probable
2006 Total Resources (40$/bl brent)
10.8 >19 >38
>25
Solid Resource Base to SustainLong Term Growth
7.0
Reservesreplacement (%)
Year-end Brent ($/bl)
Life index(year)
Reserves(Billion boe)
all sourcesorganic
12.5
5
0,0
0,5
1,0
1,5
2,0
2,5
3,0
2003 2004 2005 2006
Successful Exploration and Portfolio Renewal...
Per year Cumulative
Added Resources(Bln boe)
2.8
• MALI5 blocks onshore
• MOZAMBIQUE1 block offshore
• TIMOR EAST5 blocks offshore
New AreasCore Areas
• NIGERIA1 block offshore
• NORWAY1 licence offshore
• PAKISTAN4 blocks onshore
• USA1 block GoM48 blocks Alaska
• ANGOLA1 block offshore (Bl. 15)
• BRAZIL1 block offshore
• CONGO3 blocks offshore
• EGYPT1 block offshore
• MOROCCO1 block onshore
Resources added per year (2003/06): 700 Mboe
Average ROS SEC 2003-06: ~ 50%
Portfolio renewal: 68% of total acreage in 3 years
High quality portfolio added2003/06 cumulativeproduction
2006 new net acreage:152,000 sqkm, 99% operated
2.4
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G&P: Robust Cash Generation
Long term contract portfolio, equity gas and LNG
Widespread international infrastructure
Strong position in growing markets
Direct access to customers
Exploit dual offer
Pipeline
Eni markets
LNG ongoing
LNG existing
Pipeline
Eni markets
LNG ongoing
LNG existing
Free Cash Flow:2.1 billion in 2010
CAGR 3% (2006-2010)
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G&P: Targets
Growth in international sales
58%
97International
sales*
Italy 46%
42%
2006 2010
>105
54%
NewTarget
(bln €)
20102006
Free cash flow
1.92.1
PreviousTarget
2009
1.9**
Maintain strength in domestic
market
Increase operational efficiency
* Including Extra Europe gas sales and E&P equity gas sold in Europe (4 Bcm) ** Normalized to exclude inventory changes and extraordinary commercial credits/debits
50%
2009
>100
50%
PreviousTarget
Gas sales
CAGR 2006-10: ~10%
outside Italy
CAGR 2006-10: ~10%
outside Italy
NewTarget
Potential Upside
2.2
(bcm)
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Regulated business
International pipelines
Marketing and Power
24%
59% 80%
ItalyInternational
Free Cash Flow Generation Target
2006 2010
Activity
17%20%
50% 50%
2006 2010
1.9*2.1
Billion € Areas
* Normalized to exclude inventory changes and extraordinary commercial credits/debits
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Increase premium product sales and non-oil activities
Grow sales in Europe
Efficiency programme
Focused investment programme
• Grow refinery throughput• Increase conversion index
Pursue operational efficiency
REFINING
MARKETING
R&M: Improving Profitability
International retail presence Refineries
2010/2006 +40% ebit increaseat 2006 scenario
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Marketing
Refining
2006 2010
Estimate
Throughput* (Mln ton)
Conversion Index (%)
38.0 40.2 >43.0
41 44
2013
46
Target
57 5861
Improve conversion index and middle distillate yieldIncrease refinery throughputEnhance operational efficiency
Middle Distillate Yield (%)
2006 2010
15.8 17.4
2.5 2.7
Throughput in Europe (Mln lt/ss)Retail sales in Europe (Bln liters)
Increase sales in EuropeImprove retail network economicsEfficiency programme
High turnaround
potential
High turnaround
potential
R&M Targets
(*) Excluding processing for third parties of 1.8 Mln ton/y
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Disciplined Capex Increase
Billion €
35.2
44.6
36%
16%
48%
Other
PSA
Regulated
2006-2009 E&Pincremental
inflation
AdditionalActivities
2007-2010capex plan
37.1 2.35.2
Strong and selective investment programme 70% of additional capex devoted to grow the businessBalancing risk vs return
1.9
SRG consolidation
and forex
2006-2009pro-forma
€ blnRegulated 2 Refiningupgrading 0.6Saipem new vessels 1.1 29.6
6.7
4.34.0
E&P
G&P
R&MOthers
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Attractive Dividend & Buy Back
Dividend
2004
0.90
2003
1.10
2005
0.75
€/share
Dividend up 13.6%
Dividendpayment
0.45
0.65
5.7 billion € 2000-YTD (1Q07) share buy back (8.6% of capital)1.7 billion € still availableShare buy back
October 2006: 0.60 € per shareJune 2007: 0.65 € per share
2006 dividend sustainable in the
2007-10 period2006
1.25
0.60
0.65
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Recent Acquisitions
Core strategic area
Financial discipline
Strong contribution to long term growth
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The Strategic Rationale
Enter hydrocarbon rich regions and strengthen presence in core areas
Boost growth in the four year plan and beyond - 2006-10 CAGR: 4%
Add valuable resources: over 2 billion boe
Operatorship
Exploration potential
Improve competitive positioning in central Europe
Improve integration with local refining capacity
Strengthen existing marketing network
E&P
R&M
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New Gulf of Mexico Assets
Miocene
LegacyFields
FrontRunner
Devil TowerThunderhawk
Egom
NeptuneRigel
Main PassNewOrleans
Cash consideration US$ 4,757 bn
Increase materiality in a key area:
- 222 million boe 2P reserves
- from 36 to over 110 kboe/d (effective July 1st 2007)
Strengthen operatorship in the Gulf of Mexico
High exploration potential
EPS and CFPS accretive from 2007
272 Blocks~ 60% operated0.78 Million Net Acres
53 Fields70% of 2P reservesin 8 fields
Production Exploration Core Areas Shelf/StateShelf/State DeepwaterDeepwaterDominion assets
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Strategic partnership with Gazprom
Access to significant resources: ~ 1.5 billion boe
Sustain production growth in the long term
Leverage on operational skills and technology
Gazprom has an option to acquire a 51% interest within 2 years
If Gazprom exercises its call option:
Eni’s cash consideration: US$ 0.63 bn
Eni’s interest: 30%
Arctic Gas and Urengoil
“SINT” Assets
Moscow
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Congo Assets
Assets acquisition completed in May
Commercial assets - M’BOUNDI: 43.1%, KOUAKOUALA A: 66.7% KOUAKOUALA B, C, D: 50%
Exploration license - KOUILOU: 48%
Cash consideration: US$ 1.28 bn
2P reserves: 112 Mboe
Acquired assets equity production: 18% CAGR 2007-10
Original Oil in place ~ 1.4 GblOriginal Oil in place ~ 1.4 Gbl
Operatorship
Strengthen materiality in a legacy country
Production growth in medium term
Reserves upside
High exploration potential
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Other E&P recent acquisitions
Alaska Angola
TAPS
Nikaitchuq
Operatorship and 70% stake in the Nikaitchuq field
2P reserves: 70 Mboe
First oil 2009
13.6% stake in A-LNG
New 5 million-ton LNG plant
Monetize currently untapped reserves
Regasification capacity of 5 bcm/y in Pascagoula
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Eastern Europe Downstream Activities
102 retail stations in Czech Republic, Slovakia, Hungary
16.11% stake in Czech Refining Company
Enhance Eni’s integrated marketing and refining activities
Increase local refining capacity to 2.6 mln tons per year
Improve network quality: 4.9 mln lt/y throughput per site
Acquired assets
Industrial Rationale
Synergies
EPS accretiveFinancial Impact