20-F: Eni Navigates Volatile Markets with Strategic Portfolio Shifts

Eni reports flat net profit in 2025 despite declining crude oil prices, driven by strategic divestments and investments in new energy businesses.

Summary

• Net profit attributable to Eni shareholders remained flat at €2.61 billion in 2025, despite a 15% decline in Brent crude oil prices to an average of $69/bbl.
• Adjusted operating profit decreased by 19% to €8.344 billion in 2025, primarily due to lower crude oil prices and the appreciation of the Euro against the US Dollar.
• Net cash provided by operating activities increased to €13.33 billion in 2025, up from €13.09 billion in 2024, supported by production growth, cost efficiencies, and gas trading optimization.
• The company's net borrowings (excluding lease liabilities) decreased by €2.8 billion to €9.386 billion, resulting in a gearing ratio of 0.15, within the target range of 0.1-0.15.
• Eni's proved hydrocarbon reserves increased by 6% to 6,885 million BOE in 2025, with an all-sources reserves replacement ratio of 162% and an organic ratio of 167%.
• Average daily production increased by 1.4% to 1,594 KBOE/d, with liquids production up 7% and natural gas production down 4%.
• Significant portfolio optimization included the sale of a 30% stake in the Baleine oilfield in Côte d'Ivoire for €1.1 billion and the sale of a 49.99% stake in Eni CCUS Holding to Global Infrastructure Partners.
• Enilive and Plenitude, the company's new energy businesses, attracted substantial private equity investments: KKR acquired a 30% stake in Enilive for €3.57 billion, and Ares Capital acquired a 20% stake in Plenitude for €2 billion.
• The company is undergoing a major industrial transformation, including the permanent shutdown of two loss-making cracking plants in Brindisi and Priolo, with plans to reconvert these sites for low-carbon product manufacturing.
• R&D investment increased by 16.3% to €207 million in 2025, with approximately 80% allocated to decarbonization, circular economy, renewable energy, and magnetic confinement fusion.
• The Total Recordable Injury Rate (TRIR) improved by 21.4% to 0.55 in 2025, and total oil spills decreased by 92.3% to 217 barrels.
• Eni aims to achieve net zero emissions by 2050, with specific targets including net zero Scope 1 and 2 emissions for Upstream by 2030 and for Eni overall by 2035.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this filing as moderately positive. While core profitability faced significant headwinds from commodity prices, the company demonstrated strong financial discipline, successful asset monetization, and clear strategic progress in its energy transition businesses, which bodes well for long-term value creation.

Positives

• Net cash provided by operating activities increased to €13.33 billion, demonstrating strong cash generation despite market headwinds.
• Net borrowings significantly decreased by €2.8 billion to €9.386 billion, improving the company's financial leverage with a gearing ratio of 0.15, within the target range.
• Proved hydrocarbon reserves increased by 6% to 6,885 million BOE, with robust all-sources (162%) and organic (167%) reserves replacement ratios, indicating successful exploration and development.
• Average daily production rose to 1,594 KBOE/d, driven by new project start-ups and ramp-ups in key regions.
• Successful monetization of assets through the 'satellite model' with private equity investments in Enilive (€3.57 billion from KKR) and Plenitude (€2 billion from Ares Capital), validating the value of these new energy businesses.
• Significant progress in decarbonization efforts, with Net Scope 1+2 Upstream GHG emissions down 30.9% and Net Scope 1+2 Eni GHG emissions down 10.2%.
• Improved safety performance, with the Total Recordable Injury Rate (TRIR) decreasing by 21.4% and a substantial reduction in oil spill volumes.
• Expansion of renewable energy capacity, with installed capacity from renewables growing by 41.5% to 5.8 GW.
• Increased investment in R&D, particularly in decarbonization and circular economy initiatives, supporting long-term strategic goals.

Negatives

• Adjusted operating profit declined by 19% to €8.344 billion, primarily due to a 15% drop in Brent crude oil prices and the appreciation of the Euro against the US Dollar.
• Sales from operations decreased by 7.5% to €82.151 billion, reflecting lower energy commodity prices and reduced sales volumes in refining and chemicals.
• The Chemical business reported another year of operating losses (€819 million adjusted loss in 2025), impacted by global overcapacity, high European energy costs, and competitive pressures.
• Natural gas production decreased by 4% compared to 2024, partly due to divestments and mature field declines.
• The Euro's appreciation against the US Dollar negatively affected reported revenues, earnings, and cash flows from dollar-denominated subsidiaries, and reduced Group net equity by an estimated €6.4 billion.

Risks

• Exposure to volatile crude oil and natural gas prices, influenced by global supply/demand, economic conditions, geopolitical events, and speculative trading.
• Systemic macroeconomic risks, including escalating geopolitical tensions (Middle East, Russia-Ukraine), trade disputes, high interest rates, and global economic slowdowns, could negatively affect hydrocarbon demand and prices.
• Strong competition across all business segments, including smaller scale in E&P, pricing competition in European gas markets, global overcapacity in refining and chemicals, and low entry barriers in retail energy markets.
• Execution risk associated with the restructuring and transformation plan for the loss-making chemicals business, including obtaining permits, unforeseen costs, and liabilities.
• Rising concerns about climate change and energy transition could lead to declining hydrocarbon demand, lower prices, additional legal/regulatory measures, project delays/cancellations, and increased compliance costs.
• Physical impacts of climate change (e.g., extreme weather) could disrupt operations and damage assets.
• Reputational risk from being perceived as a 'fossil fuel company' could reduce attractiveness to investors and limit access to capital markets, potentially increasing the cost of capital.
• Investments in low or zero-carbon products and services may not achieve expected returns due to market competition, uncertain regulatory frameworks, and challenges in developing new technologies and supply chains.
• Exposure to significant operational and economic risks in oil and gas exploration and production, including natural hazards, unsuccessful drilling, cost overruns, and inability to replace reserves.
• Uncertainties in estimates of oil and natural gas reserves, which are subject to revisions based on new data, economic conditions, and regulatory changes.
• Political risks and uncertainties in non-OECD countries (e.g., Libya, Venezuela, Egypt) where a significant portion of proved reserves are located, including socio-political instability, unfavorable enforcement of laws, and international sanctions.
• Specific risks in gas and electricity businesses, such as take-or-pay obligations in long-term gas supply contracts and regulatory powers of the Italian Regulatory Authority for Energy, Networks and Environment (ARERA) affecting pricing.
• Exposure to material environmental liabilities from pending litigation related to alleged breaches of environmental laws, contamination, and remediation costs.
• Risks related to legal proceedings and compliance with anti-corruption legislation, potentially leading to criminal/civil penalties and reputational damage.
• Ineffectiveness of crisis management systems in responding to disruptions or incidents.
• Cyberattacks, disruptions, or breaches of IT systems and digital infrastructure could adversely affect business, increase costs, and damage reputation.
• Violations of data protection laws, carrying fines and exposing the company to criminal sanctions and civil suits.
• Treasury and trading risks, including liquidity risk, interest rate risk, foreign exchange risk, commodity price risk, and credit risk, potentially leading to substantial losses.

Future Outlook

Eni anticipates a Brent crude oil price of $70/bbl (nominal) in 2026, with a gradual recovery to $75/bbl (real 2025) by 2030, and a decline to $53/bbl (real 2025) by 2050, reflecting energy transition impacts. The company projects a compounded average production growth rate of 3-4% through 2030, driven by LNG expansion and new project developments. Capital expenditures are budgeted at approximately €7 billion in 2026 and €29 billion for the 2026-2030 period, with a significant portion directed towards hydrocarbons. Eni expects to maintain a gearing ratio of 0.1-0.15 and plans to increase the yearly dividend to €1.10 per share for 2026, complemented by a share buyback program of at least €1.5 billion. The company aims for net zero emissions by 2050, with upstream net zero Scope 1 & 2 by 2030, 15 GW of renewable capacity by 2030, and 5 million tons of biofuel capacity by 2030.

Management Comments

• Claudio Descalzi, Chief Executive Officer, certified that the report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made not misleading, and that the financial statements fairly present the financial condition, results of operations, and cash flows.
• Francesco Esposito, Head of Accounting and Financial Statements, certified the report's compliance and fair presentation of financial information.
• Management believes the Group recorded a solid performance in 2025 despite market headwinds, driven by initiatives to withstand lower crude oil prices and other exogenous factors.
• Management is fully committed to retaining efficient operations to preserve the profitability of its oil&gas business and a healthy balance sheet across the cycle.

Industry Context

StockSavvy.ai notes Eni's strategic repositioning towards natural gas and renewable energies aligns with broader industry trends of energy transition and decarbonization. The company's 'satellite model' for new energy businesses (Enilive, Plenitude, CCUS) is a notable strategy to attract external capital and de-risk growth in these nascent sectors, a common approach among integrated energy majors. The challenges faced by Eni's refining and chemicals segments, including global overcapacity, high European operating costs, and competitive pressures, reflect a wider industry struggle in traditional downstream activities. The volatility in commodity markets, influenced by geopolitical tensions and macroeconomic factors, remains a significant backdrop for all energy companies, with Eni's focus on cost discipline and portfolio optimization being a critical response.

Comparison to Industry Standards

• Eni's E&P segment faces a competitive disadvantage due to its relatively smaller scale compared to other major international oil companies when bidding for large-scale or capital-intensive projects.
• The European petrochemicals industry, where Eni's chemical business operates, is plagued by global overcapacity, competitive pressures, reduced demand, and comparatively higher production costs (e.g., energy inputs, environmental liabilities) than competitors in the US and Asia.
• Biofuels prices are negatively affected by oversupplies and an uncertain regulatory environment, impacting profitability compared to more stable commodity markets.
• Renewable electricity sold at spot markets is exposed to risks of uneconomic pricing or curtailed volumes, reflecting objective limits of current transmission networks to handle peak production volumes, a common challenge in the renewable sector.
• Eni's insurance coverage is stated to be in line with industry practice, but the company acknowledges potential exposure to material uninsured losses in catastrophic incidents due to limited market capacity.
• The gearing ratio of 0.15 (excluding lease liabilities) is within the company's planned range of 0.1-0.15, indicating a solid financial structure that compares favorably to many industry peers, especially considering the volatile market.

Management Changes

Corporate Governance

Legal Proceedings

• **Ongoing Criminal Proceedings (Environment, Health, Safety):**
• Public Prosecutor of Sassari appealed the acquittal of Eni Rewind SpA in the 'Illegal landfill in Minciaredda area – Porto Torres site' case, with the judgment pending at the Second Instance Court.
• Public Prosecutor of Gela appealed the first instance acquittal of Raffineria di Gela SpA and Eni Mediterranea Idrocarburi SpA in the 'Alleged environmental disaster' case, pending at the First Instance Court of Caltanissetta.
• A criminal proceeding is pending against former COVA officers and Eni SpA (pursuant to Legislative Decree No. 231/01) for an alleged 'Val dAgri – Tank spill', with the trial in its initial phase.
• An investigation is ongoing regarding 'Versalis SpA – Preventive seizure at the Priolo Gargallo plant' concerning dangerous disposal of materials and environmental pollution.
• A criminal proceeding is ongoing regarding 'Versalis SpA – Seizure of the treatment plant managed by IAS SpA – Priolo Gargallo' for alleged environmental disaster and discharge violations.
• A trial phase is pending in the 'Eni Rewind SpA and Versalis SpA – Mantua. Environmental crime investigation' for alleged unauthorized waste management, environmental damage, and pollution.
• A first instance proceeding is underway in the 'Eni SpA R&M Depot of Civitavecchia – Criminal proceedings for groundwater pollution' case.
• The 'Eni SpA R&M Genoa Pegli storage hub – Criminal proceeding for crude oil spill – September 2022' is in the preliminary investigation phase.
• A criminal proceeding is pending for alleged environmental pollution and lack of remediation at the 'Sannazzaro Refinery – Public Prosecutor's Office of Pavia', currently in the preliminary investigation phase.
• A criminal proceeding is ongoing concerning an alleged crime of pollution of groundwater underlying the fuel depot in Pomezia, with the first instance judgment initiation stage.
• A criminal proceeding is in the preliminary investigation phase regarding the fatal accident at the 'Eni SpA – Calenzano depot – explosion' on December 9, 2024, which caused five deaths.
• The 'Enimed SpA – attempted environmental pollution' case is pending at the preliminary hearing stage.
• **Ongoing Civil and Administrative Proceedings (Environment, Health, Safety, Antitrust):**
• The Republic of Kazakhstan initiated an international arbitration against the Karachaganak consortium (Eni's share 29.25%) for a revision of cost recovery, with proceedings underway.
• The Republic of Kazakhstan initiated a further international arbitration against the NCSPSA Contractor (Eni's share 16.67%) for alleged violations, with an ICSID arbitration initiated by the consortium.
• The Italian Antitrust Authority (AGCM) imposed a €32 million fine on Novamont SpA and Eni SpA for alleged abuse of dominant position in the bioplastics market; Eni appealed to the Regional Administrative Court of Lazio.
• A complex administrative dispute is ongoing regarding the 'Augusta Harbor' environmental status, with Eni appealing TAR sentences.
• A civil claim is pending in the Court of Potenza against Eni by 80 plaintiffs for alleged economic, non-economic, biological, and moral damages deriving from Eni's oil facilities in the Val dAgri area, with a hearing set for July 10, 2026.
• Eni Rewind SpA is involved in an administrative dispute with the Province of Vicenza regarding the 'Clean-up process for Trissino site', with Eni appealing the Regional Administrative Court's ruling.
• A climate dispute is ongoing before the Civil Court of Rome, initiated by NGOs Greenpeace Onlus and ReCommon APS and private citizens, claiming Eni's liability for climate change; the proceeding is ongoing at the Third Instance Court.
• A claim for compensation for alleged damages deriving from constructions created by NAOC in Nigeria is pending against Eni SpA, with the first hearing held on December 10, 2024.
• An administrative dispute is ongoing with the Calabria Region, Province, and Municipality of Crotone, and WWF Italy/ARCI regarding the 'Crotone Site of National Interest' remediation, with activities yet to start due to local authority warnings.
• The AGCM imposed a significant fine on Eni SpA for alleged collusion on fixing the price of the 'bio component' of automotive fuels; Eni appealed to the Regional Administrative Court of Lazio.
• **Settled Proceedings:**
• The criminal proceeding regarding 'Eni Rewind SpA – Crotone omitted clean-up' was dismissed without charges.
• The criminal proceeding relating to a 'Fatal accident Ancona offshore platform' concluded with the definitive acquittal of Eni employees and the entity.
• Criminal proceedings regarding 'Raffineria di Gela SpA and Eni Rewind SpA – Groundwater pollution survey and reclamation process of the Gela site' concluded with the acquittal of all defendants, and the ruling is final.
• The civil proceeding seeking compensation for alleged causality between certain pathologies and industrial pollution at the Gela site concluded without any charges against Eni.

Related Party Transactions

• Eni engages in transactions for the purchase, sale, and supply of goods and services, and provision of financing with joint ventures, associates, and non-consolidated subsidiaries.
• Transactions also occur with entities controlled by the Italian Government, including Cassa Depositi e Prestiti Group, Enel Group, Italgas Group, Snam Group, Terna Group, GSE Gestore Servizi Energetici, and ITA Airways.
• Contributions are made to Eni Foundation and Eni Enrico Mattei Foundation for humanitarian, cultural, and research initiatives.
• All related party transactions are conducted in the interest of the Group and are related to the ordinary course of business, with the exception of those for humanitarian, cultural, and scientific initiatives.
• Receivables from joint ventures and associates amounted to €3.644 billion, and payables to €8.163 billion as of December 31, 2025.
• Receivables from entities controlled by the Government amounted to €2.738 billion, and payables to €4.745 billion as of December 31, 2025.
• Financing receivables from joint ventures and associates amounted to €2.928 billion, and payables to €451 million as of December 31, 2025.
• Main transactions include expenses for oil field development, crude oil purchases, supply of specialist services, and guarantees issued on behalf of joint ventures and associates.
• Significant transactions with Italian Government-controlled entities involve activities for plant operation, energy sales/purchases, infrastructure services, and financial debt for electric vehicle charging infrastructure.

Stakeholder Impact

• **Shareholders:** The company is committed to delivering a progressive and competitive shareholder remuneration policy, with a planned increase in the yearly dividend to €1.10 per share for 2026 and a share buyback program of at least €1.5 billion, aiming for competitive returns.
• **Employees:** The Employee Stock Ownership Plan 2024-2026 and long-term incentive plans are designed to strengthen employee retention and participation in corporate value growth. The company also focuses on health and safety, with improved injury rates and reduced oil spills.
• **Customers:** Eni aims to meet customer demand for energy while transitioning to decarbonized products, expanding renewable energy offerings, biofuels, and EV charging infrastructure. The retail market faces increasing competition, impacting customer loyalty.
• **Suppliers & Partners:** The 'satellite model' involves partnerships and joint ventures (e.g., KKR, Ares, GIP, Petronas) to develop new energy businesses and optimize the upstream portfolio, creating opportunities for collaboration.
• **Creditors:** A solid financial structure, reduced net borrowings, and a liquidity reserve of €18.8 billion, along with €9 billion in committed borrowing facilities, aim to ensure financial stability and meet obligations, mitigating liquidity risk.
• **Communities & Environment:** Eni's decarbonization strategy, including net zero targets and investments in carbon capture and storage, aims to reduce environmental impact. However, ongoing legal proceedings related to environmental damage and pollution pose risks to local communities and the company's reputation.

Next Steps

• Complete the reorganization of Plenitude's shareholding structure, leading to its deconsolidation from Eni's financial statements in 2026.
• Start operations of the new gas and LNG joint venture in Indonesia/Malaysia by mid-2026.
• Divest an additional 10% stake in the Baleine project in Côte d'Ivoire in 2026.
• Divest a 25% interest in the Congo FLNG project.
• Achieve production start-up for the L7-F gas development project in the Netherlands in 2026.
• Achieve production from the L10-M4 development well in the Netherlands in 2026.
• Achieve start-up for the Bouri Gas Utilization Project in Libya in 2026.
• Complete the conversion of the Livorno refinery into a biorefinery by the end of 2026.
• Launch the Sannazzaro biorefinery unit, with a final investment decision expected shortly.
• Complete the LG-Eni BioRefining plant in South Korea by 2027.
• Achieve production start-up for the Coral North FLNG project in Mozambique by the end of 2028.
• Complete the Priolo biorefinery by the end of 2028.
• Achieve first gas at the large Argentina FLNG project in the medium term.
• Increase oil and gas production at a compounded average growth rate of 3-4% through 2030.
• Reach 5 million tons of installed biofuel manufacturing capacity by 2030.
• Expand renewable installed capacity to 15 GW by 2030, and further to 60 GW by 2050.
• Expand the network of electric vehicle charging points to 30,000 by 2030, and about 160,000 by 2050.
• Grow the customer base for retail gas and power to 15 million in Europe by 2030.
• Execute a share buyback program of at least €1.5 billion in 2026, subject to shareholder approval.
• Distribute a yearly dividend of €1.10 per share for 2026, paid in four quarterly installments.

Key Dates

Recommendation

Eni's 2025 performance reflects a challenging commodity price environment, leading to a decline in adjusted operating profit. However, the company demonstrated strong financial resilience through effective cash flow management and significant debt reduction. Its strategic pivot towards new energy businesses, evidenced by substantial private equity investments in Enilive and Plenitude, is a positive long-term driver. The increased dividend and planned share buyback signal management's confidence. Nevertheless, ongoing geopolitical uncertainties, persistent losses in the chemicals segment, and numerous environmental legal proceedings introduce considerable risks. A seasoned investor would likely 'hold' to observe the successful execution of the energy transition strategy and the resolution of market and legal challenges before committing to a stronger position.

Keywords

Oil and Gas, Energy Transition, Renewables, Biofuels, LNG, Exploration & Production, Decarbonization, SEC Filing, Financial Results, Capital Expenditures, Net Zero, Climate Change, Corporate Governance, Risk Management, Italy, Africa, Asia, Europe