Eni, the Italian oil and gas company, beats its profit forecast thanks to strong upstream operations

Eni, the Italian energy group, beat expectations on Thursday by posting a 35% increase in adjusted fourth-quarter earnings compared to last year. This was due to a strong performance from its exploration and production division as well as improved refinery results.

The adjusted net profit was 1.2 billion euros (1.4 billion dollars) between October-December, up from the 885 million euros in the same time period last year. This beat the analysts' consensus estimate of 960 million euros that the company had compiled.

The hydrocarbon production increased to 1.839 millions barrels of oil-equivalent per day, an increase of 7% on the previous year and above analysts' expectations.

The state-controlled group began six major upstream project in Angola last year.

The company also signed an agreement to form a joint venture with the Malaysian state energy company Petronas, to manage certain upstream assets located in Indonesia and Malaysia. Eni announced that the entity would begin operations at the end of this year.

Claudio Descalzi, CEO of the company, said that "Exploration and Production results were outstanding. They were driven by accretive growth in production and disciplined cost management."

Cash flow was 3 billion euros, compared to 2.9 billion euros one year earlier. This is above the consensus estimate of 2.8 billion euros.

Gearing, or the ratio of debt to equity in the group, fell from 18% to 14% at end-2024 due to proceeds derived from a sale?of a?minority stake?in Plenitude.

Eni has said that it expects net capital expenditure to be around 5 billion euro this year and production growth in line with a 2%-3% increase per annum as indicated in its 2025-2028 plan.

The 2026 guidance shows lower capital expenditures than expected. This is due to the Indonesia JV's?closure mid-year. Production growth also looks?likely to continue and will be supported by a?new volume from this deal," Biraj Borkhataria, an analyst at RBC, said.

Eni will present a strategic update at its Capital Markets Day on the 19th of March.

(source: Reuters)