Italian energy major Eni SpA’s (E) share price jumped 1.5% on the day it announced a 1.8% hike in its 2014 dividend. The increased dividend is part of its progressive payout to shareholders that includes investor-friendly measures of a share-buyback program.
In its 2014–2017 Strategic presentation, the company said that it intends to pay a dividend of EUR 1.12 ($1.52) a share on its 2014 earnings versus EUR 1.10 for 2013.
Eni’s capital expenditure in the four-year plan is expected to be 5% lower at EUR 54 billion from the prior-year plan. At the same time, the company expects cash generation to increase 45% in the 2014–2017 time frame from 2013.
The company projects average annual hydrocarbon output to grow 3% in 2013–2017, and increase to 4% in the 2017–23 period. In 2014, production is expected to remain flat. The main growth drivers will be 26 projects that are likely to contribute around 500,000 barrels of oil equivalent per day by 2017. The delay in growth will be caused by disruptions in Libya and Nigeria where steady recovery is expected 2015 onward.
Eni expects to renegotiate all its supply costs in the gas and power segment as well as increase its focus on premium segments like LNG, trading and retail, to boost earnings in this segment. It also expects to lower its logistics and fixed costs resulting in savings of over EUR 300 million by 2017.
The company also intends to cut refining capacity to bring it in line with the new market conditions. It proposes to further cut the Italian refining capacity by 2017.
As part of its four-year plan, the company targets to dispose assets worth EUR 9 billion. Assets to be divested include shares in Italian gas grid Snam SpA, Portuguese energy company GALP Energia SGPS SA, as well as some upstream assets.
Eni carries a Zacks Rank #3 (Hold). However, better-ranked stocks in the oil and gas sector include Helmerich & Payne, Inc. (HP), Matrix Service Company (MTRX) and Cabot Oil & Gas Corporation (COG), each holding a Zacks Rank #1 (Strong Buy).
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