Eni SpA - $ENI.IM

What’s Eni SpA Business Model?

Eni SpA explores for and produces hydrocarbons in Italy, Africa, the North Sea, the Gulf of Mexico, Kazakhstan, and Australia. The Company both produces natural gas and imports it for sale in Italy and elsewhere in Europe. Eni transports natural gas in pipelines. The Company generates and trades electricity, refines oil, and operates gasoline service stations.

What Eni SpA is doing in more details?

Eni is one of the world’s major oil and gas suppliers, engaging in exploration, development, production, and trading activities worldwide. Downstream, its portfolio of refineries, transmission networks and power generation plants sell fuels/biofuels, chemical products, lubricants, and gas & power.

Outside its home country of Italy, Eni is active Africa, Europe, and North America as well as other productive gas regions such as Kazakhstan and Venezuela. Europe, which accounts for most of Eni’s sales, is home to more than 5,400 service stations.

The company has 4.7 GW of installed energy generation capacity and more than 7 billion barrels of oil equivalent proved hydrocarbon reserves.

Where Eni SpA is Operating?

Eni has four reporting segments: Gas & Power; Exploration & Production; Refining & Marketing and Chemicals; and Corporate and Other activities.

Gas & Power generates more than 50% of Eni’s total sales. The segment consists of Eni’s supply and marketing of natural gas and LNG and the supply, production, and marketing of power. Natural gas and power reach wholesale and retail customers while LNG is sold to businesses/other entities only.

The Refining & Marketing and Chemicals segment accounts for around 25% of sales and comprises Eni’s manufacturing, supply, and distribution and marketing activities of oil and chemical products.

Exploration & Production generates about 25% of sales. Explores for, develops, and produces crude oil, LNG, and natural gas, including the construction and operations of liquefaction plants.

Corporate and other activities generates more than 1% of sales. It provide services to the operating subsidiaries, comprising holding, financing and treasury, IT, HR, real estate, legal assistance, captive insurance, as well as the results of the Group environmental.

Taking an Upstream-Downstream view of Eni, the company’s Upstream units have onshore and offshore projects that pick oil exploration blocks, drill wells and manage the whole hydrocarbon production operations.

In the Midstream and Downstream sectors, Eni manages the transportation and storage of hydrocarbons, as well as the refining, marketing and distribution of oil products.

Where is the geographical reach of Eni SpA?

Based in Rome, Italy, Eni is active in more than 65 countries worldwide across Europe (Italy, Norway, and the UK), Africa (Algeria, Angola, Congo, Egypt, Ghana, Libya, Mozambique, Nigeria), the US, Venezuela, and Kazakhstan. Of Eni’s 5,400 service stations in Europe, about 4,200 are in Italy.

Europe accounts for nearly 70% of annual sales, Africa generates about 15% of sales, Asia more than 10% of sales and the Americas gives in roughly 5% of sales.

What is Eni SpA’s Sales and Marketing Strategy?

Eni spent ?176 million, ?161 million, and ?102 million in marketing expense for fiscal years 2019, 2018, and 2017, respectively.

What is Eni SpA Financial Performance?

Note: Growth rates may differ after conversion to US Dollars.

Total revenues amounted to ?71.0 billion, reporting a decrease of 8%. Sales from operations in the full year of 2019 (?70.0 billion) decreased by ?5.9 billion or down by 8% from 2018.

In the full year 2019, the group reported net profit attributable to Eni’s shareholders of ?148 million (?4.1 billion in the full year 2018). The reported operating profit was ?6.4 billion, approximately 36% lower than in 2018, down by ?3.6 billion; approximately 80% of the decline is related to the E&P segment.

Eni’s cash on hand fell during 2019, ending the year ?4.9 billion higher at ?6.0 billion. The company’s operations generated ?12.4 billion, while its investing activities used ?11.4 billion and its financing used ?5.8 billion.

Its biggest cash uses were investments in tangible assets, long-term debt repayments, and dividends.

What is Eni SpA Future Strategy?

Eni’s business model is focused on creating value for its stakeholders and shareholders through a strong presence along the whole value chain.

Firstly, Eni’s business is constantly focused on the operational excellence.

A continuous commitment to the valorization of people and, in HSE, to the safeguard of health and safety and environmental protection; the efficiency and resilience of operations, thanks to which Eni has accelerated projects’ time-to-market, reducing its break-even; a solid financial discipline; and the maximum attention to the integrity and respect for human rights.

Secondly, Eni’s business model envisages a path to decarbonization with the ambition to lead the company to become carbon neutral in the long-term.

Lastly, Eni’s value creation will leverage on the alliances for the promotion of local development in its countries of operation.

Eni is not only committed to address the valorization of resources of producing countries, allocating its unity initiatives – from diversification of local economies, to health projects, education, access to water and hygiene.

This distinctive approach, called Dual Flag, is based on collaborations with institutions, cooperation agencies and local stakeholders in order to identify certain necessary actions to meet the needs of communities in line with the National Development Plans and the 2030 UN Agenda.

What are Eni SpA’s Mergers and Acquisitions?

Eni completed its merger of its Eni Norge AS with Point Resources and HitecVision to form Var Energi, which will operate as an independent exploration and production energy company of hydrocarbons in Norway.

Eni owns 69.6 percent of Var Energu, with 30.4 percent belonging to HitecVision. The newly formed company will have 17 oil and gas fields stretching from the Barents Sea to the North Sea and reserves around 1,250 mboe.

What is Eni SpA’s History?

Although the Italian parliament formed Ente Nazionale Idrocarburi (National Hydrocarbon Agency) in 1953, Enrico Mattei is the true father of Eni.

In 1945 Mattei, a partisan leader during WWII, was appointed northern commissioner of Agip, a state-owned petroleum company founded in 1926 by Mussolini, and ordered to liquidate the company. Mattei instead ordered the exploration of the Po Valley, where workers found methane gas deposits in 1946.

When Eni was created in 1953, Mattei was named president. His job was to find energy resources for an oil-poor country. He initiated a series of joint ventures with several Middle Eastern and African nations, offering better deals than his large oil company rivals, which he dubbed the Seven Sisters.

Mattei didn’t stick to energy: By the time he died in a mysterious plane crash in 1962, Eni had acquired machinery manufacturer Pignone, finance company Sofid, Milan newspaper Il Giorno, and textile company Lane Rossi.

Eni grew during the 1960s, partly because of a deal made for Soviet crude in 1958 and a joint venture with Esso in 1963. It also expanded its chemical activities.

By the early 1970s losses in Eni’s chemical and textile operations, the oil crisis, and the Italian government’s dumping of unprofitable companies on Eni hurt its bottom line. Former finance minister Franco Reviglio took over in 1983 and began cutting inefficient operations.

EniChem merged with Montedison, Italy’s largest private chemical company, in 1988, but clashes between the public agency and the private company made Montedison sell back its stake in 1990. Eni became a joint stock company in 1992, but the government retained a majority stake.

Franco Bernabe took over Eni following a 1993 bribery scandal and began cutting noncore businesses. The Italian government began selling Eni stock in 1995. In 1996 Eni signed on to develop Libyan gas resources and build a pipeline to Italy.

A year later the company merged its Agipa exploration and production subsidiary into its main operations. Eni also took a 35% stake in Italian telecom company Albacom (which has since been sold to British Telecom Group).

The government cut its stake in Eni from 51% to 38% in 1998. That year Vittorio Mincato, a company veteran, succeeded Bernabe as CEO.

In 1999 Eni and Russia’s RAO Gazprom, the world’s largest natural gas production firm, agreed to build a controversial $3 billion natural gas pipeline stretching from Russia to Turkey.

Eni agreed to invest $5.5 billion to develop oil and gas reserves in Libya; it also sold interests in Saipem and Nuovo Pignone, as well as some of its Italian service stations.

In 2000 Eni paid about $910 million for a 33% stake in Galp, a Portuguese oil and gas company that also has natural gas utility operations.

Also that year Eni bought British-Borneo Oil & Gas in a $1.2 billion deal, and in 2001 it paid $4 billion for UK independent exploration and production company LASMO, topping a bid by US-based Amerada Hess.

The Italian government sold off another 5% of Eni in 2001, reducing its stake to about 30%, and announced that it was considering selling its entire investment. In an effort to reduce noncore holdings, the company sold property management subsidiary Immobiliare Metanopoli to Goldman Sachs.

Also that year Eni sold a minority stake in its gas pipeline unit, Snam Rete Gas, to the public.

In 2002 Eni entered discussions to acquire Enterprise Oil, but lost out to a rival bid from Royal Dutch Shell.

Later that year Eni’s oil field services unit Saipem gained control of Bouygues Offshore.In 2006 Eni and Gazprom formed an international alliance to launch joint mid and downstream gas projects, and collaborate in upstream and in technological activities.

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