Eni (E) Q3 2026 Earnings Call Transcript

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DATE

Friday, Oct. 23, 2026

CALL PARTICIPANTS

• Chief Transition and Financial Officer - Francesco Gattei
• Head of Trading - Stefano Poyatti
• CEO of Enilive - Stefano Ballista

TAKEAWAYS

• Full-year Production Guidance -- 6% to 7% underlying growth, reflecting strong execution in Congo, Libya, Côte d'Ivoire, and Indonesia.
• Exploration Success -- 1.2 billion barrels of discovered resources, achieving an 80% technical success rate and a 70% commercial rate.
• Discovery Cost -- below $1 per barrel, demonstrating the efficiency of the company's decade-long exploration strategy and technology-led capabilities.
• Exploration Valorization -- $2 billion raised, driven by the dual exploration valorization model in Côte d'Ivoire and Indonesia.
• Satellite Market Capitalization -- EUR 10.5 billion for equity stakes in Vår Energi and Ithaca, representing nearly double the original investment value.
• LNG Production Target -- more than 20 million tonnes per year by 2030, supported by new supply contracts in Indonesia and Cyprus totaling 3.4 million tonnes per year.
• Pro Forma EBIT Guidance -- EUR 1.5 billion for the Global Gas & LNG Portfolio (GGP), representing an increase in the full-year outlook for the segment.
• Sanctioned Production Pipeline -- 600,000 barrels per day of new production by 2030, following major projects sanctioned during the 2026 fiscal year.
• Equity Resource Additions -- 4.6 billion barrels of oil equivalent (BOE), resulting from new agreements and opportunities identified in Venezuela, Argentina, and Indonesia.
• Venezuela Phase 1 Production -- 200,000 barrels per day gross, expected within 18 to 24 months of the final investment decision on the Junín 5 field.
• Transition Business Valuation -- EUR 25 billion combined market valuation for Enilive and Plenitude, reflecting value creation from satellite business structures.
• Net Income -- EUR 2.8 billion for the third quarter, an increase of 20% compared to the previous quarter despite lower crude oil prices.
• Cash Flow from Operations -- EUR 4.3 billion before working capital effects, representing a 30% increase year over year.
• Full-year CFFO Guidance -- EUR 16.5 billion, which is 43% above the company's initial guidance for the 2026 fiscal year.
• Capital Expenditure -- EUR 1.35 billion for the third quarter, remaining consistent with the full-year guidance of EUR 7 billion.
• Gearing -- 10% reported and 9% on a pro forma basis, reaching record minimum levels for the company's balance sheet.
• Share Buyback -- EUR 3.8 billion for the 2026 fiscal year, raised from the previous target of EUR 3.4 billion due to strong cash generation.
• Total Shareholder Distribution -- EUR 8.2 billion, including a total cash dividend of EUR 4.4 billion and the increased buyback program.
• Group Tax Rate -- 32% for the quarter, with full-year guidance set between 36% and 37% due to business combinations and higher proportions of results in lower tax regimes.
• Argentina Financing Target -- 65% to 70% for upcoming upstream and LNG projects, reflecting strong market appetite for the development in Vaca Muerta.
• Refining Margin -- $22 per barrel current Standard Eni Refining Margin (SERM), though the quarter-to-date average stands at $18 per barrel reflecting volatile market conditions.
• Fuel Price Cap Impact -- a few hundred million euros per quarter, estimated under current market conditions as part of a social responsibility initiative for Italian retail customers.

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RISKS

• Francesco Gattei stated, "Plenitude results were impacted by the current competitive environment in the retail space," noting that aggressive marketing policies from new entrants have pressured the segment.
• Management noted that European chemical operations face structural disadvantages in energy costs and demand compared to the Middle East and U.S. markets, which puts the Versalis segment in a weaker competitive position.
• Francesco Gattei highlighted a "complex operating environment in the Middle East and constraints on Kazakh export" as factors affecting global production and logistics.

SUMMARY

Eni S.p.A. (NYSE:E) reported record levels of shareholder distribution and cash flow generation, underpinned by sector-leading production growth in the upstream segment. Management highlighted the success of its satellite model, which has surfaced significant valuation for transition-linked businesses and exploration assets. The company is advancing major projects in Venezuela and Argentina to secure long-term resource depth while maintaining a disciplined capital expenditure framework. Financial strength reached a historical peak with gearing at the bottom of the guided range, allowing for an upgrade in the share buyback program and the declaration of an exceptional dividend.

• The company signed a new 25-year contractual regime for the Junín 5 field in Venezuela, with plans for phased development that management believes could eventually reach 1 million barrels per day gross production.
• In Argentina, management is targeting a final investment decision by year-end for upstream and LNG projects, leveraging the new RIGI regulatory framework designed for large-scale investments.
• The Global Gas & LNG Portfolio reached a milestone with the completion of the Douglas CCS platform in Liverpool Bay, the first offshore platform dedicated to industrial-scale carbon dioxide transport and storage.
• CEO of Enilive Stefano Ballista noted strong fundamentals in the biofuel market, stating, "The demand, it is going to stay there," as European and U.S. regulatory directives continue to drive volume.
• Chief Transition and Financial Officer Francesco Gattei highlighted the social responsibility of energy providers, explaining that the company implemented fuel price caps to support customers during the energy crisis.
• Gattei stated, "Eni is one of the strongest position in its history," reflecting the company's ability to navigate different price environments through its diversified business satellite model.

INDUSTRY GLOSSARY

• SERM: Standard Eni Refining Margin, a benchmark used to measure the profitability of refining operations.
• FID: Final Investment Decision, the point at which a company commits to the execution and funding of a project.
• RIGI: The Incentive Regime for Large Investments, a regulatory framework in Argentina designed to attract mega-projects through fiscal incentives.
• Enilive: Eni's business unit focused on biorefining, sustainable mobility, and the retail sale of fuels and services.
• Plenitude: Eni's subsidiary that integrates renewable energy production, retail power sales, and electric vehicle charging infrastructure.
• BOE: Barrels of Oil Equivalent, a unit of energy used to combine gas and oil production into a single measure.
• CCUS: Carbon Capture, Utilization, and Storage, a technology for capturing carbon dioxide emissions to prevent them from entering the atmosphere.
• Junín 5: A super-giant oil field in the Orinoco Belt of Venezuela with approximately 35 billion barrels of oil in place.
• Perla: A major offshore gas field in Venezuela managed by Eni and Repsol.

Full Conference Call Transcript

Operator: Good afternoon, ladies and gentlemen, and welcome to Eni's 2026 third quarter results conference call hosted by Mr. Francesco Gattei, Chief Transition and Financial Officer. For the duration of the call, you will be in listen-only mode. However, at the end of the call, you will have the opportunity to ask questions by pressing star and one on your telephone. I am now handing you over to your hosts to begin today's conference. Thank you.

Francesco Gattei: Thank you. Good afternoon, and welcome to Eni Q3 conference call. In this quarter, Eni has shown once again that this strategy is working and delivering outstanding results. We are driving distinctive, real asset-driven organic growth in both the upstream, expanding into new geographies with major projects and in our new businesses linked to the energy transition. At the same time, we are generating strong cash flow and bringing our debt down to its lowest level ever. As we grow, we want all our shareholders to share in the upside. That is why we combine our industrial strategy with a progressive distribution policy that has also reached a record level.

Before describing our additional distribution, let me highlight the key milestone of this quarter and of 2026. Starting with upstream, where production growth is already sector-leading, propelled by our differentiated industrial, organic, technology-led capabilities. We have already had a standout year for exploration, even when set against a decade-long track record of success. We've discovered resources of more than 1.2 billion barrels. Our technical rate of success is 80%, and our commercial rate is 70%. Really remarkable. But remarkable still is that this has been achieved with a discovery cost of below $1 per barrel. Strong execution of our strategy has enabled us to raise our full-year underlying production guidance to 6-7%.

The growth primarily comes from Congo, Libya, Côte d'Ivoire, Mexico, Ghana, and from the business combination in Indonesia, Malaysia called Searah, and comes despite the complex operating environment in the Middle East and constraints on Kazakh export. And we are locking in future production growth with key FID this year of Baleine Phase 3 in Côte d'Ivoire, Kutai North and Gendalo Indonesia, Cronos in Cyprus, and Greater PAJ in Angola. Nor is volume growth our single target. We are guided by value. Hence, through our dual exploration valorization in Côte d'Ivoire and Indonesia, we have raised around $2 billion of accelerated value.

On top of that, we are working up an unprecedented level of access to discovered resources, employing our technology and fast-track development skills to mature opportunities in Venezuela and Argentina. Our two listed satellites are also adding new resources, with Vår Energi and Ithaca recently announcing acquisition, expanding their geographical footprint and deepening their resource base in Denmark and Canada, respectively. A proof point in their delivery of value is that both companies recently reached record market capitalization with an equity stake value for Eni now at around EUR 10.5 billion, almost doubling the original level. Our gas and LNG strategy is delivering tangible value already.

New LNG supply contracts signed in Indonesia and Cyprus for a total of up to 3.4 million tonnes per year strengthen the path towards our target of more than 20 million tonnes per year of LNG equity production by 2030 and support the increase of our 2026 full-year pro forma EBIT guidance to around EUR 1.5 billion. As to the CCUS business, this year we completed the installation of the new Douglas CCS platform in Liverpool Bay, the world's first purpose-built offshore platform dedicated to industrial-scale CO2 transportation and storage. We have also progressed the development of the Ravenna Phase 2 project, securing further support through the award of European Commission's Innovation Fund.

It is worth looking at this in the context of our expanding and increasingly balanced global footprint. Exploration success has come in West Africa, Egypt, and Indonesia. It is a mix of infrastructure-led in known plays and higher-impact discoveries, but all representing considerable value. We have built and strengthened four major growth hubs across the Far East, the Americas, Africa, and the Mediterranean, giving us a deep and diversified resource base. Projects sanctioned in FY 2026 will deliver at around 600,000 bpd of new production at 2030, underscoring the scale and quality of our development pipeline. This is a continuously evolving portfolio.

New agreements and additional opportunities have been identified or implemented in 2026, contributing around 4.6 billion BOE of additional equity resource. Let me also take a moment to update in a bit more detail on our progress in Venezuela, where we appreciate things have been moving very quickly. In early September, we signed the new contractual regime that will govern the Junín 5 field for the next 25 years. We have already submitted development plans to the Venezuelan authorities. Upon approval, we intend to quickly move forward to FID on Phase 1, which will add 200,000 bbl gross in 24 months. This could be before the end of this year.

Further phases could then take full field production to a gross level of 1 million barrels per day. Also, earlier this year, we signed a sustainability agreement on Perla, giving Eni control of export and revenues from which we will pay our royalty and taxes while resuming payment for our gas. In addition, the agreement allows for some de-bottlenecking of production for the domestic market, while also defining a new expansion phase for future LNG export, roughly doubling production. It's important to emphasize our objective is to manage our free cash flow position over both Junín and Perla, carefully managing the net capital.

Phase development and timely farm-downs to manage the risk-reward are a fundamental feature of Eni's upstream strategy, as you know. Before going into more detail on our performance for the quarter, let's also cover transition. Providing further important balance to our company, we continue to capture value from our transition activities, where Enilive has reported record result this quarter, coming ahead of a year when we expected to add significant new biorefining capacity and bring in by year-end the benefits of our recent purchase of the marketing asset in Germany. At the end of the quarter, we have also completed the additional investment in Plenitude with Ares taking a larger share.

This new structure will efficiently support the next phase of growth for Plenitude. In fact, emphasizing our value creation, we now have market valuation implying a value of these two largest company in the transition business at a combining EUR 25 billion. Our satellite strategy is a key tool to our success in building new transition businesses without sacrificing investment into E&P. Turning now to Q3 results. These fully reflect our objective to grow Eni while simultaneously reducing risk and adding the optionality that comes with a low-geared balance sheet and delivering an attractive return to our shareholder. E&P reported production growth of 4.2%.

Combined with a supportive market environment and a focus on efficient operation, we generated pro forma EBIT of EUR 4.6 billion. GGP pro forma EBIT of EUR 0.4 billion came without one-time benefits seen in Q2 2026, and was driven by strong gas and LNG optimization results. There were no one-off contract adjustment in the quarter. In transition, Enilive and Plenitude together reported pro forma EBIT of EUR 0.7 billion, corresponding to EUR 0.6 billion of pro forma EBIT, with Enilive benefiting from supporting biorefining margins, while Plenitude results were impacted by the current competitive environment in the retail space.

Transformation saw Refining report a further recovery in utilization as the major turnaround activity was completed, meaning we were provided important supply to customers and were able to capture the strong market conditions. Versalis suffered from a reversal in the scenario from Q2, but the underlying performance remain on track towards its target of break-even in 2028. Contribution from associates reflect a full quarter of Searah, the business combination in the Far East. Our share of the ADNOC refinery returned to profitability.

The group tax rate of 32% reflect a tax rate of 35% in E&P, helped by high grading of production, a higher proportion of results in lower tax regimes, and the effect of the satellites, plus also the improved contribution from Enilive and Refining. We now expect a full-year charge of between 36% and 37%. Net income of EUR 2.8 billion was up 20% quarter-on-quarter, despite lower oil price and up 2.2x year-on-year. CFFO before working capital effect was EUR 4.3 billion, broadly in line with Q2 despite lower crude oil prices and 30% up year-on-year.

Capital expenditure of EUR 1.35 billion is consistent with the EUR 7 billion we have guided to, and consistent with our comments to expect a lower figure in the second half with the consolidation of Plenitude and the upstream activity in Indonesia. The impact of the strong cash flow from operation generation, our disciplined net investment, and the consolidation of Plenitude debt, equivalent to EUR 2.75 billion, improved our balance sheet with a reported gearing now at 10%, the bottom end of the guided 10%-15% range, while pro forma gearing is at 9%, both levels representing a record minimum.

The continuing improvement in our balance sheet metrics is also confirmed by a recent upgrade by Standard & Poor on our credit rating and its initiation of an investment-grade rating on Plenitude. For the full year 2026, we now seek cash flow from operation at EUR 16.5 billion, 43% above our initial guidance. This underpins our shareholder returns and covers the dividend, our first priority, by more than 5x. Our historically strong balance sheet position and excellent cash flow from operation allow us to confirm the raise in our share buyback and the announcement of a special dividend. Today, we are raising our 2026 share buyback to EUR 3.8 billion from EUR 3.4 billion, 2.5x above the original guidance.

Additionally, we can confirm we are declaring an exceptional dividend of EUR 1.3 billion with ex-dividend date on 7th of December, bringing our total cash dividend this year to EUR 4.4 billion, the highest level in our history. This represents a total payout of EUR 8.2 billion or 50% of cash flow from operation, equivalent to a yield on our share price of more than 11%. With this, I conclude my remarks on what I think you will agree was another excellent quarter, consistent with our view shared at Q2, that Eni is one of the strongest position in its history. Together now with my colleagues from Eni management team, I am happy to take your questions.

Operator: This is the conference operator. Please press star one for questions and star two to remove yourself from the question queue. I now leave the floor to Mr. Jon Rigby for the Q&A session.

Jon Rigby: Thanks very much. We are going to move to the first question in the queue, and that is Alejandro Vigil at Santander. Alex, if you would like to ask your question. Thanks.

Alejandro Vigil: Yes. Thank you for taking my questions and congratulations for this result. Probably two questions that are related also potentially with the capital market day in 2027. But basically, looking at the strong underlying growth in the upstream business, my question is what is the level of CapEx you need to maintain this profile in the coming years? If the EUR 7 billion is enough or you have to look at this number. The second question is about Venezuela. I am very interested on the Junín 5 and the Perla project. You can give us an indication on the total CapEx needed to reach those levels of production.

Although you also highlighted the possibility of farm-out, but just so you can give us some numbers. Thank you.

Francesco Gattei: I will answer to the CapEx. Clearly, it is a bit early now to discuss about Capital Market Day because we are starting to work in the coming weeks on the plan that we are going to present next year. But sure, what you could expect is that the model that we have built, and thus proved, has the potential to make you grow in different direction, different businesses, and geographies without compromising the amount of investment. Actually maximizing the opportunity and therefore the speed of this transformation and growth while keeping a steady level of CapEx. So we could continue to expect something that is in the range of what we have seen this year and also last year.

About the Venezuela, I leave now to Guido Brusco.

Guido Brusco: On Venezuela, as you know, it is a phased project first of all, and then we will leverage on facilities with spare capacity. Of course, over time, we will have to build new facilities as the production volumes will increase. So I would say we are still in an assessing phase to understand the level of capital. But for sure, at the very beginning will be low intensity, utilizing spare capacity which is in the country available.

Alejandro Vigil: Okay. Understood. [Non-English content]

Jon Rigby: That's Guido. Thanks, Alex. We're going to now move to Michele Della Vigna at Goldman Sachs. Michele.

Michele Della Vigna: Thank you very much, and congratulations on the very strong results. I wanted to ask two questions. First, on tanker rates for crude, we've seen a crazy increase over 20 times the normalized level. Could you give us an idea of how much of your crude transport needs are covered by long-term agreements versus spot rates? It's never really mattered that much before, but it is very important, especially as we start to model the fourth quarter realizations. Secondly, you've achieved very low tax rates in the last two quarters. You're guiding 36%-37% for this year. Is that also what we should use for modeling next year?

Or perhaps with a more normalized refining environment, let's say maybe something closer to 40%-45% would be more appropriate. Thank you.

Francesco Gattei: Okay. I leave to Stefano Poyatti, Head of Trading, the answer about the tankers rate, and then we'll come back to the tax rate.

Stefano Poyatti: Yes. In terms of shipping strategy, I would say 60% roughly of the shipping that we do is under long-term agreements. This is providing us a mitigation on the current very high prices that we are seeing on the market from one side, and from the other is giving us a certainty of being able to deliver the volumes. The remaining 40% is more, let's say, on the spot market. But let's say, more than half of those, we are able through the sales, through selling contracts actually to pass through those costs to the buyer.

Francesco Gattei: Okay. About the tax rate, clearly, the tax rate evolution is related to two factors. One is the level of pricing. Clearly, the contribution of the different segment or different upstream geographies on one case, but also from the point of view of the different business. R&M on one side, or gas and power on another side, and Enilive are supporting on helping to reduce the tax rate. The other factor that is more structural, not related to the price, is the fact that the business combination reduce the tax rate. You receive just practically the net result from this company, and therefore you do not have any rate applied to that result.

For this reason, you should expect clearly a range that is much lower than the historical level that we had in the past in a normalized price environment. Clearly, the price remain where it is now. This is also helping to keep it even lower. Thank you.

Michele Della Vigna: Thank you.

Jon Rigby: Thanks, Michele. We are going to move to Alessandro Pozzi at Mediobanca. Alessandro?

Alessandro Pozzi: Yep. Thank you, Jon. I have two questions. The first one is going back to Venezuela. You talked about a phased approach. You talked about initial phase of 200,000 bpd, increasing to potentially 1 million, which is quite significant. I believe, is that just for Junín 5? That is what I understood. I was wondering, can you give us a bit of maybe the timing within which you aim to get there? Also, I think Junín is in the Orinoco Belt, and historically it has been heavy oil. You need a lot of diluents to extract the oil. I was wondering about any technical challenges that you may face there, basically. On the second question is on Argentina.

I believe there is an FID targeted around year-end. Can you give us an update about the regulatory approvals that you need, the RIGI framework, and financing as well? Can you clarify what would be the accounting for Argentina upstream and LNG? Thank you.

Francesco Gattei: I leave both answer to Guido.

Guido Brusco: Okay. I am just finishing too. Okay. Starting from Venezuela, a bit of a timing. On the Phase 1, which would reach the 200,000 bpd, we expect between 18 and 24 months. Then we have another intermediate level, which is 400, which we will achieve by end of 2029. Then the 1 million is the potential which we will achieve in mid, let us say, 2032, 2033. You have to consider that this is a super giant with 35 billion barrel of oil in place. So, the potential is there. Clearly, we have to build, as you have appreciated, the right logistic, the right supply chain, and this will take some time, of course.

From a subsurface standpoint, we know the rocks, we know the reservoir. You spotted the right point. We need a lot of diluents, but we also have synergies with our assets in Venezuela. We have condensate from Perla, and we expect to double the production of condensate in Perla with the future export of LNG. This could be used as a diluent for the heavy oil of Junín 5. Equally, we have another asset, Corocoro, on which we have also a plan to increase production. It's light oil, or lighter than the oil of Junín 5, and this also could be used as a diluent.

The amount required is large, but we have also some synergies we can leverage in country to overcome that. Going to Argentina, there are a few things required for the FID. From a technical point of view, commercial point of view, and also supply chain, contractors have been identified, so that part of the work is done. RIGI, we have just submitted the application, and we expect to get it approved before, of course, the FID. The government and the stakeholders are very supportive. RIGI have been designed for this kind of project. RIGI is all about mega project like this one. The financing, of course, we made market sounding. We've tested the market. There is a very strong appetite.

Our target is to achieve a 65%-70% financing for this project. On the accounting, I would leave to-

Francesco Gattei: I will complement that. On the accounting, both the upstream and the midstream activities will be consolidated, because we'll be structured around special purpose vehicle that, as also Guido said, will attract the specific financing tools.

Alessandro Pozzi: Okay. That includes the LNG, the midstream part?

Francesco Gattei: Correct.

Guido Brusco: Yes. It's midstream.

Alessandro Pozzi: Okay. All right. Thank you.

Jon Rigby: Thanks, Alessandro. We are now going to move to Lydia Rainforth at Barclays. Lydia.

Lydia Rainforth: Thanks, Jon, and good afternoon, everyone. Again, thank you for the results and the presentation. A quick one just on Venezuela. I just want to come back to, I think it was slide five, where you talk about 600,000 bpd of new production in 2030 alone as being sanctioned in 2026. Can I just check, does that include Venezuela or not? Just because obviously that one hasn't been sanctioned as yet. So I just want to check on that one.

Then just when you look at that idea of 2026, materially changing the portfolio and adding as much resource as you have, can you just give us a sense of the scale of that change in terms of, do you feel that this has been a year where actually for Eni it's been a step change in the resource additions? Thanks.

Francesco Gattei: I think Guido is the right person.

Guido Brusco: Yeah. Those in the 600,000 bpd Venezuela is not included, to give you a straight answer. 2026 was clearly a very strategic and a turning point for us. We've continued our phenomenal exploration success, but we also, with the strategic agreement in Venezuela and Argentina, we've accessed very large resources in Vaca Muerta and of course in Junín 5. The 4.6 billion of BOE reflects that access. Of course, the lion's share is done by Argentina and Venezuela. But if you could have appreciated also in the slide, we have created four major hubs engine of growth. It's not only America's, it's also Indonesia with the two FID, and the third hub coming with Geliga.

But it's also Africa and the Mediterranean with Cronos in the Mediterranean, with the discovery of Denise in Egypt, with Baleine Phase 3, with Greater PAJ in Angola, with the ramp-up of Congo LNG, Coral North in Mozambique. So it is Venezuela and Argentina, but not only that.

Lydia Rainforth: Thank you.

Jon Rigby: Thanks, Lydia. We're going to move now to Josh Stone at UBS. Josh.

Josh Stone: Yeah, thanks, Jon, and thanks, Francesco. Thanks, everyone else. One question on the balance sheet that is quite striking, your gearing now being below 10% on a pro forma basis. So wondering how you're thinking about that, Francesco, looking into 2027. If the current upturn continues, would you consider going net cash potentially? Or is the idea just keep giving excess cash back to shareholders? I'm just curious your thoughts there. Second question on chemicals. Everything seems to be going better than expected, except for Versalis, where it seems to be losing more money than it was at least under nine months versus last year if I include the transformation cost.

I understand the macro's been very difficult for petrochemicals, but is there anything else you think that can be done to help stop the losses here? Thanks.

Francesco Gattei: Thank you, Joshua, for the question about gearing. Clearly, we have a model that allows us to grow and distribute, as we said, at a record level, but also to manage different cycles in the oil prices and the commodity prices. What is the real advantage of what we built is a sort of ship that is able to navigate different seas. Clearly, in a period as the one that we have seen in this 2026, there is, how can I say, an amount of cash that was originally not included, but that we considered in any case. I would say we were quite able to anticipate a potential scenario to share this upside to the shareholder.

On the other side, to use this upside for our balance sheet. 2027, clearly, we have to see how the crisis is evolving in the coming months. It will take time to recover a normalized price environment. What is more important is that for us, the opportunity is to use at the best the financial potential that we have inside the company. It is not only gearing of Eni is a reference, but also are the different financial potentials that is inside the different combination, the different entity that we built. Do we expect to reach net debt positive cash? It is not in our assumption, but it is something that could happen in the case of scenario.

The distribution policy, I think is something that we are going to discuss with the board with the plan under our eyes with the board next year. Clearly, it is something that will follow the same logic. If there is an upside related to our capability to capture and to execute better than expected, we like to share the upside. I leave it to Adriano for the Versalis answer.

Adriano Alfani: Yes. Thank Josh for the question. I think we need to make a distinction between what is the trajectory and what was the second quarter of 2026. That was a special quarter. Let me say special from the impact of Hormuz. When we look, as you ask, compared to the same quarter of 2025, the EBIT pro forma is slightly better. I will say the line is slightly better than the third quarter of 2025. As a result of a scenario that remain extremely weak from a demand point of view, but that is significantly worse from a utilities point of view.

You know that the chemical sector is very energy intensive, and also from a negative impact of import duties that starting from the 1st of July of 2026, have been eliminated completely versus the U.S. Of course, this is putting Europe even in a weaker position from a competitiveness point of view. What we have done and what we are doing is moving on with our transformation plan that on a quarterly base represent almost EUR 90 million. Unfortunately, this is offset completely by utilities and by the negative scenario. What else we can do?

You need to consider that as we always discussed, Europe does not have the strong demand of Asia, and Europe does not have the competitiveness in term of feedstock and energy that the Middle East and the U.S. have. Europe has to play with competencies and innovation to transform. This is what we are doing, and this is what we are going to share more also in the next capital market day on how we are going to accelerate our transformation.

Josh Stone: Thank you.

Jon Rigby: Thanks, Adriano. Thanks, Josh. Next up is Paul Redman at BNP Paribas. Paul.

Paul Redman: Hello, everyone, and thank you very much for your time. My first question was just on refining margins. If I look at your macro assumptions for 2026, I think you are implying about $25 per barrel SERM margin for 4Q. I wanted to ask what you have seen so far in October, on SERM margins and whether that includes shipping costs, as was discussed at the beginning of the call. Secondly, as part of your Eni for Italy commitments, you put in fuel caps. I wanted to ask what the quarterly impact on earnings and cash flow could be from those. Thank you.

Francesco Gattei: Okay. If you want to answer, Pino Ricci, and then he will answer about the cap.

Pino Ricci: Yes. Thank you for the question about refining margin. Of course, the adjusted SERM, the standard margin that we use, include the freight cost that increased a lot during the last period because of the Hormuz situation. As include also the different yields that, of course, change in the crude, the change in completed slate of crude.

Francesco Gattei: About the-

Paul Redman: And sorry, just-

Francesco Gattei: Oh, yeah.

Paul Redman: Apologies for interrupting. I was just going to ask, what is the SERM today?

Francesco Gattei: The SERM today, I tell you which is the figure, is $22. The quarter today is $18.

Paul Redman: Thank you.

Francesco Gattei: Okay, about the cap that you mentioned, clearly is worthwhile to mention that, for us, doing business means managing a strategy to pursue sustainable and long-term value. We believe that companies have a social responsibility. We cannot be a company that is, let's say, living in a sort of bubble outside the real world. We have to be realistic and thinking that supporting customer is a priority for a company that is working on a basic needs as energy. For this reason, we have decided to introduce a cap to our sales of gasoline and diesel. This is a cap that will be, let's say, assessed periodically.

In term of impact, we estimate that under the current market condition, assuming the level that we have seen so far, the impact in a quarter will be in the range of a few hundred millions. This is the logic of what we are doing and the magnitude of the impact.

Paul Redman: Thank you for that.

Jon Rigby: Thank you, Paul. We're going to move on now to Henry Tarr at Berenberg. Henry.

Henry Tarr: Hi there, and thanks for taking my question. Could we focus on Enilive? Another very strong quarter in Q3. What is the outlook for that business into Q4 and then into 2027? It seems as though policy in Europe remains very supportive. Do you see that continuing to be the case even if we continue with very high prices to consumers? Do you think security of supply sort of trumps the cost issue? Thank you.

Francesco Gattei: Yes. I leave to Stefano Ballista, the CEO of Enilive.

Stefano Ballista: Yeah. The market scenario is very constructive. The key point is mainly driven by fundamentals. Fundamentals means that in Europe, the Renewable Energy Directive that has been deployed already in 17 countries, and we got draft from other seven countries that are going to do it just after. This demand, it is going to stay there. In U.S., rational is the same. On top of EPA new target we discussed in previous quarter, we got extra clarity on clean fuel production credit during this quarter that are going to increase clearly and reduce market uncertainty. On top, we got reallocation of small refinery exemption to all rest of demand, so keeping the scenario very supportive.

Moving forward, we see the situation remaining The current geopolitics context actually is going to give the biofuel an extra contribution on top of the environmental sustainability in term of security of supply. Because value chain on biofuel are decoupled from the oil one, so they can be used with the same distribution network and with the same engine. This is an extra value that we see on biofuel enforcing current strong fundamentals.

Henry Tarr: Thank you. If I could just have a quick follow-up. Are you exporting volumes to the U.S. today?

Stefano Ballista: Today, we are not exporting volume to U.S. because the optimal outlet is Europe, given the arbs. We got volume from U.S. to Europe up to, let's say, couple of months ago due to open arbs. Now, given the change of the economics in U.S., that is at a very high level, the optimal solution is to keep that volume in U.S.

Henry Tarr: Thank you very much.

Stefano Ballista: You are welcome.

Jon Rigby: Thanks. Thank you, Henry. We're going to move now to Massimo Bonisoli at Equita. Massimo?

Massimo Bonisoli: Hello, Jon. Thank you, and good afternoon. One question on Plenitude. You lowered the EBITDA guidance to EUR 1.2 billion from EUR 1.3 billion, citing increasing competitive pressure in retail and weaker condition in renewable. Could you elaborate on which factors are driving the downgrade and whether you expect these headwinds to persist into 2027? Thank you.

Francesco Gattei: About, yes, Plenitude. The market environment, in particular retail, was particularly challenging because there are a number of players that are entering the market with aggressive policies, so they are trying to open to build their customer bases, and therefore they are defining aggressive marketing activities. We are actually working and reacting, as you have seen also recently with the policy, with the new announcement that we have done, and we see improvement or return of quite a number of new entry in our customer bases. That was also enlarged by Acea Energia acquisition that we completed this year. There is another factor that is impacting our performance this year that was a one-off.

It was related to the fact that during the summer there was a spike in term of power demand that has practically pushed well above any expectation, the request of our customer. Therefore, we had to buy on a spot basis that energy, so this is something that will return positively, clearly related to the weather or to the climate conditions. Clearly, we have to continue to adapt our retail marketing activity to take into account of this new environment that is characterizing mainly Italian market. We do expect clearly an improvement.

We are also to consider that with the new injection of capital, Plenitude has probably one of the strongest position in term of financial power of the player of the sectors. We need to use this money in the best way.

Massimo Bonisoli: Thank you, Francesco.

Jon Rigby: Thanks, Massimo. We're going to move now to Chris Kuplent at Bank of America. Chris?

Chris Kuplent: Yeah, thank you very much. In the same vein, if I may ask you, Francesco, maybe you can give us an overall estimate for the impact about all these price caps that you've press released in the last few weeks, whether it's on fuels, whether it's on power, et cetera. In whatever shape or form, you can give us a little bit of an idea what the financial impact is on that.

Then I was just going to follow up and ask you whether you can give us more insight into the timing of dividends from your affiliates, so we can get a better handle for what is in your Q4 budget, what you're expecting there, because it seems like Q3 was a rather handsome receipt in terms of dividend payments to the mothership. Thank you.

Francesco Gattei: About the price cap, we have already said that assuming the current level of cap and assuming the current forward curve, we are speaking about a few hundred millions in a quarter. So that is related to the fuel. While for the marketing positioning of Plenitude is just some millions for this year and a bit more for the next year, but it's not changing the overall number that I mentioned before. In the fourth quarter, the key contributor for the distribution policy will be Searah. That is material. There is also some contribution coming from Vår Energi, and I think also from Azule.

Chris Kuplent: Great. Thank you.

Jon Rigby: Thank you, Chris. Getting to the end of the list, we have Alastair Syme at Citigroup. Al, are you still with us?

Alastair Syme: I am, Jon.

Jon Rigby: Very good.

Alastair Syme: Maybe this is a question to Stefano. I was looking at the Enilive sales data, and I am somewhat surprised to see quite strong growth, particularly in Italy. I think you are talking about retail sales up 11% year-on-year. Maybe just some perspective on that. Are we looking at same store sales data? I mean, we are in the midst of an energy crisis. Unusual to see double-digit growth numbers. Thank you.

Jon Rigby: Yes, to Stefano.

Stefano Ballista: Yeah, no, thank you for the question. Well, the growth is driven by retail demand. This is clearly related to our pricing strategy as well. This is part of the focus on customers, so part of the social responsibility that Francesco just highlighted. On top, actually, we got very focused, let us say, before the price cap pricing approach in order to optimize value, including also non-oil contribution, so as a whole. Other side of this approach is in order to optimize portfolio, we reduced our wholesale exposure exactly to maximize the value.

So reducing exposure on the lowest margin segment on the wholesale, given the current portfolio and given the ongoing market dynamics in term of plus price, plus premium.

Alastair Syme: Just to be clear, Stefano, what we are seeing is some sort of market share gain then on the retail side. Is that the way to interpret it?

Stefano Ballista: Oh, yes, definitely. Sorry. Yeah, absolutely.

Alastair Syme: Yeah.

Stefano Ballista: There is a significant market share gain, yes. It's exactly the implication, this number related to us, not to the global market. Global market is pretty much in line. In Italy, there's not been any significant swing compared to the expectation. This is an extra volume we are capturing, thanks to the overall strategy we have in place.

Alastair Syme: Perfect. Thank you very much.

Stefano Ballista: You're welcome.

Jon Rigby: Thanks, Al. We're going to move to the last question now. It's Sasi at Jefferies. Sasi, are you there?

Sasi Chilukuru: Yes. Thanks for taking my question. I had one left on Venezuela, regarding Perla. I was just wondering if it was possible to provide a timeline for the development of the export facility there as well. Recent press reports have indicated that an initial partner could be brought into the project. I was just wondering if you can comment on those discussions, if you're marketing it currently, and clarify whether a farm down is necessary to take an FID on the export project there.

Francesco Gattei: Guido. Thank you.

Guido Brusco: On Perla, we have submitted the plan of development, which foresee two steps. One is a debottlenecking of the current onshore plant to provide additional 90 million standard cubic feet per day to the domestic market, and then the second phase is the export through a floating LNG of about 3.4, 3.5 million tons per annum. We have stated already that once we will take the FID, it will take three and a half year, give and take, to bring this volume on production. The FID, of course, is subject to the approval of the plan of development from the first party from the government.

The good news is that the technical work has been done, and also the supply chain has been somehow identified.

Sasi Chilukuru: Thank you.

Jon Rigby: Thanks, Sasi. Thanks, Guido. With that, we are going to close the call. Thank you very much for your interest. Any other questions, do not hesitate to reach out to the investor relations team. Have a great weekend. Thank you very much.

Francesco Gattei: Thank you.

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