Italian energy company Eni is considering splitting its shares in promising oil and gas projects to finance its low-carbon initiatives while allocating more resources to green ventures. CEO Claudio Descalzi’s strategy of creating separate assets or “satellites” could involve projects in Indonesia and Ivory Coast.
This move will allow Eni to attract investments from private equity firms and infrastructure funds and appeal to investors interested in traditional or low-carbon energy sectors.
CFO Francesco Gattei explained that the satellite model is designed to provide additional funding sources to balance demand for traditional products with the development of greener alternatives.
Eni has already taken steps in this direction by establishing the retail and renewable unit Plenitude and the biofuel division Enilive, both of which have attracted external investment and are planned for further growth financing through public offerings.
Eni has successfully spun off its fossil fuel operations in the past, including merging its British North Sea oil and gas operations with Ithaca Energy and recently striking a deal to acquire approximately 38.5% of the company’s shares worth about $1 billion. This deal allows Eni to reduce its capital expenditures and potentially receive dividends from Ithaca.
Additionally, the company has formed a joint venture with HitecVision to establish and list the Norwegian oil and gas company Vaar and set up Azule Energy, a joint venture with BP in Angola. These subsidiaries operate loosely under Eni, managing their capital expenditures and debts independently and even paying dividends to the parent company.
During a mid-March market update, Eni announced its intention to raise approximately 4 billion euros (4.31 billion dollars) from listing or selling stakes in its low-carbon satellites and another 4 billion euros from its oil and gas exploration and production units between 2024 and 2027.
The company’s strategy emphasizes flexibility and its ability to attract private equity. While some analysts are optimistic about the strategic positioning and potential value appreciation of Enilive and its public listing, others remain skeptical about the stock market’s recognition of the value created by Eni’s satellite entities.
Eni has recently improved its distribution policy and increased its 2024 share buyback program. However, CFO Francesco Gattei dismissed the idea of special dividends associated with asset disposals. The company continues to explore the possibility of transforming other units such as bioplastic producer Novamont and Carbon Capture and Storage operations into independent satellites as part of its broader strategy.
Source: investing.com
