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Eni becomes latest energy major to raise dividend as prices jump

Eni SpA updates

Eni raised its dividend back to its pre-pandemic level and launched an accelerated share buyback on Friday, becoming the latest energy major to exploit the rally in oil and gas prices to return cash to shareholders.

The move follows similar payouts this week from Royal Dutch Shell, TotalEnergies and Norway’s Equinor as the industry looks to tempt back investors after a bruising 2020 and concerns over their long-term strategies, which need to balance cash generation from fossil fuels against growing investments in the energy transition.

Eni chief executive Claudio Descalzi said the Italian company was in a position to start returning cash to investors and was not overly dependent on oil’s rally back to near $70 a barrel this year, from its crash below $20 last spring.

“Last year was very painful for everybody,” Descalzi told the Financial Times. “[But] we really want to send a strong message to investors — we feel stronger. We feel stronger in the sense that even if the oil and gas price should be lower in the future we are developing other business lines that will also perform.”

The company doubled its forecast for renewable energy production in the year to around 2 gigawatts following a number of deals. Oil and gas output was held for the full year at 1.7m barrels a day.

“The overarching message is similar to peers: good strategic progress on transformation efforts [and] a rebound in cash flow,” said Oswald Clint, an analyst at Bernstein.

Eni’s dividend will be restored to 86 euro cents a share after it was cut last year to 36 cents, while the “accelerated” share buyback will be €400m. Half of the dividend will be paid in September, the company said.

Adjusted net profit for the second quarter rebounded to €929m, beating analyst expectations of about €600m. Last year for the same period it posted a loss of €714m.

Descalzi said that proceeds from the stronger oil price, as well as providing additional returns to shareholders, would primarily be invested in renewables and other forms of cleaner energy, such as biofuels.

“We are using the cash from the upstream business to accelerate the transition,” Descalzi said.

“The oil price can help to accelerate diversification — we can’t escape, we can’t run away from this transition.”

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