Italy's energy giant Eni has revealed solid performance in the second quarter and the first half of 2023, despite
its results being affected by a steep drop in oil and gas prices compared to bumper profits from last year. The oil
major made good use of this quarter to pursue its transition strategy to low-carbon energy by amplifying the
share of natural gas production in its global portfolio through new acquisitions. This strategy tackles the dual
challenge of accelerating the energy transition towards net-zero while bolstering Europe's energy security.

The volatility, turmoil, and energy price shocks, which marked 2022, raised more than a few eyebrows, but they
also brought sky-high profits for oil and gas players. Judging by the oil majors' most recent quarterly results, this
golden era for the fossil energy market is now behind them, even though each still recorded a strong operational
performance. This is illustrated by the quarterly results posted by Eni's peers – Equinor, Shell, and TotalEnergies
– which show that low-carbon and renewable energy pursuits have (to an extent) cushioned the fall for some.

As the pressure and urgency to transition to a low-carbon energy future grow stronger, Eni took several steps
during 2Q and 1H 2023 towards getting to grips with the dual challenge of meeting the growing demand for
energy while reducing greenhouse gas emissions by turning to natural gas and expanding its global footprint
through acquisitions.

The Italian giant is currently in the process of acquiring Neptune Energy's entire portfolio of gas-oriented assets
and operations in Western Europe, North Africa, Indonesia, and Australia. The deal excludes Neptune's
operations in Germany and Norway. However, the Norwegian assets will be taken over by the oil major's
majority-owned Vår Energi. The Neptune acquisition has an aggregate enterprise value of $4.9 billion.

According to Eni, this acquisition will increase its production plateau by over 100 Kboe/d including its share of
Vår, by adding cost-competitive, low-emission volumes that will underpin its strategy of “growing its share of
natural gas production and speeding up the transition, while at the same time enhancing security of energy
supplies to Europe.” The acquisition is expected to be completed at the beginning of 2024, subject to the
finalisation of antitrust procedures and other customary conditions. It will be immediately accretive to Eni's
earnings and cash flow also leveraging expected synergies of at least $0.5 billion.

Another acquisition, which will fortify the oil major's oil and gas portfolio is the deal for Chevron's assets in
Indonesia. This acquisition is also in line with Eni's energy transition strategy, which features natural gas and
LNG as key pillars, in a bid to increase the portion of gas production to 60 per cent by 2030. It is expected to
enable the fast-track development of ongoing projects in the area and the integration with Neptune Energy
assets. The closing of the transaction is subject to customary governmental and regulatory approvals.

Eni's adjusted operating profit before tax of €3.7 billion ($4.06 billion) in 2Q 2023 was down 41 per cent from
€6.22 billion ($6.8 billion) in 2Q 2022. For the oil major, this represents “a highly robust outcome” given the 30
per cent fall in crude oil prices and with gas prices and refining margins down over 60 per cent. The firm
emphasised that pro-forma adjusted EBIT – including the operating margin of equity accounted entities – was
€4.2 billion ($4.6 billion) in 2Q 2023 vs. €7 billion ($7.7 billion) in 2Q 2022, reflecting resilient E&P earnings
featuring growing production, another very strong contribution from Global Gas Portfolio (GGP), plus
contributions from Sustainable Mobility and Plenitude segments.

The Italian player's adjusted net profit attributable to its shareholders was €1.94 billion ($2.13 billion) in 2Q 2023,
thus, compared with €3.8 billion ($4.17 billion) in 2Q 2022, it was 49 per cent lower impacted by the weaker
scenario, but significantly offset by underlying business performance. The company's adjusted tax rate, which did
not include Italian extraordinary contributions, was under 50 per cent despite the inclusion of the UK Energy
Profit Levy. The adjusted net profit attributable to Eni shareholders in 1H 2023 was €4.84 billion ($5.31 billion)
down 32 per cent from €7.08 billion ($7.77 billion) in 1H 2022.

Eni's adjusted operating cash flow before working capital at replacement cost was €4.2 billion ($4.4 billion) in 2Q
2023, compared to €5.2 billion ($5.7 billion) in 2Q 2022. This exceeds outflows related to organic capex of €2.6
billion ($2.85 billion) and dividend payments. The adjusted cash flow in 1H 2023 was €9.5 billion ($10.43 billion)
compared to €10.8 billion ($11.85 billion), which results in an organic free cash flow of €3 billion ($3.3 billion).

Claudio Descalzi, Eni's CEO, commented: “Eni has delivered excellent operating and financial results in 2Q 2023
despite a less supportive environment. This resilience is significant after having successfully captured upside in
the previous stronger scenario. Furthermore, alongside the results delivery, Eni has also made considerable
steps forward in advancing strategy across the business.”

The oil major's E&P segment earned €2.1 billion ($2.3 billion) of adjusted EBIT in 2Q 2023, impacted by weaker
realised prices and with year-over-year comparisons impacted by the deconsolidation of Azule. Including the
contribution of JV/associates, proforma adjusted EBIT was €2.8 billion (over $3.07 billion), down 52 per cent,
also impacted by a higher exploration charge. For 1H 2023, the result was €4.9 billion ($5.4 billion) compared to
€9.3 billion ($10.21 billion) in 1H 2022. This quarter's production was up 2 per cent year-over-year.

Furthermore, the firm's GGP segment earned €1.1 billion ($1.21 billion) in 2Q 2023 of adjusted EBIT, compared
to around breakeven in the same period of 2022, resulting in a 1H EBIT outcome of €2.5 billion ($2.75 billion),
mostly driven by specific benefits relating to contractual triggers, renegotiations and settlements related to
previous periods that are a feature of the business. Additionally, in a market environment still characterised by
some degree of volatility and arbitrage opportunities, the continued asset optimisation and trading have also
contributed to the quarterly performance.

The company's Plenitude & Power segment delivered €0.17 billion ($0.19 billion) of adjusted EBIT, which is up
18 per cent year-over-year. In 1H 2023 the adjusted EBIT was €0.35 billion ($0.38 billion), up 8 per cent from
€0.32 billion ($0.35 billion) in 1H 2022, supported by the retail business and the ramp-up in the renewable
installed capacity and production volumes, and optimisations in gas-fired power generation activities.

Descalzi further added: “Actions in the strategic transformation of the company are already positively impacting
our results and 2023 has seen further significant advances. Alongside expanding our biorefining capacity with the
Chalmette JV and the Novamont green chemicals purchase, in June we announced the proposed acquisition of
Neptune Energy. Neptune's gas-focused portfolio, geographic and operational complementarity with Eni and its
low operating emissions profile is an exceptional fit with our strategic objectives yielding significant operating and
financial upside.

“Our strategic initiatives will each contribute towards the very positive performance progression targeted in our
plan. Considering our first-half results and continuing business performance that drives raised guidance, we have
a solid position from which to pay our first quarterly instalment of the raised €0.94 per share 2023 dividend in
September and continue our €2.2 bln buyback which commenced in May.''

The energy giant further underlined that around 360 million boe of new resources were added to the reserve
base in 1H 2023, driven mainly by the discoveries made off Cyprus, Mexico, Congo, and Egypt while a positive
appraisal of prior findings was also made in Abu Dhabi. In April, the FPSO Firenze – to be renamed Baleine upon
its mooring – sailed away from Dubai to the Baleine field in Côte d'Ivoire. This FPSO has been refurbished and
upgraded to increase its processing capacity up to 15,000 bbl/d of oil and around 25 mmcf/d of associated gas.

That same month, Eni and SPP, Slovakia's largest energy supplier, signed a memorandum of understanding
(MoU) for commercial cooperation in the gas and LNG sector, aimed at evaluating initiatives in the areas of
trading and management of regasification and transportation capacities to secure and strengthen supplies of
natural gas to the Slovak Republic.

Eni also inaugurated the Congo LNG project, the country's first natural gas liquefaction project and one of the
firm's core supply diversification initiatives. The project is expected to start before the end of the year and to
reach an overall LNG production capacity of 3 mln tons per year (approximately 4.5 bln cubic meters/year) from
2025.

The following month, the Italian player offloaded the first LNG cargo from Egypt's Damietta liquefaction plant into
Snam's new regasification terminal in Piombino, off Tuscany. This was followed by the delivery of the first
commercial cargo from Algeria's Betihoua plant in July.

The month before this, Eni signed an agreement with Perenco for the sale of its participating interest in several
production licences in Congo. This transaction value is approximately $300 million and the closing is subject to
the authorisation of relevant local and regulatory authorities.

Race to decarbonise ops
In line with this decarbonisation strategy, Eni inked a memorandum of intent (MoI) in May 2023 with Guiné
Bissau to explore potential areas of collaboration in exploration, nature and technology-based climate solutions,
agriculture, sustainability and health. Other areas of collaboration include the evaluation of the exploration
potential of the country's offshore area.

During the same month, the Italian energy giant signed a MoU with Sonangol to evaluate possible joint initiatives
in the areas of energy transition, including agro-industrial supply chains for the production of low-carbon fuels,
the valorization of biomass for agro-industrial applications and critical minerals.

Come June 2023, Eni announced a memorandum of understanding with Libya to evaluate possible opportunities
to reduce GHG emissions and develop sustainable energy in the country. Under the terms of the memorandum,
the company will work on reducing CO2 emissions through the reduction of routine gas flaring, fugitive emissions
and venting, as well as possible projects for the reduction of hard-to-abate sector emissions.

What will the rest of 2023 bring?
Within its outlook for 2023, Eni outlines that the hydrocarbon production for 2023 is confirmed in the range of
1.63-1.67 mln boe/d in a price scenario of $80/bbl. In 3Q 2023, production is forecast to be about 1.63 mln boe/d.
The exploration target of 700 mln boe of discovered resources is confirmed.

The company reaffirmed its adjusted EBIT guidance of €12 billion ($13.2 billion) even at the lowered reference
scenario, an underlying raise in guidance of around €2 billion ($2.2 billion). At the lowered scenario assumptions,
the firm expects cash flow from operations before working capital to be between €15.5 – €16 billion ($17.1 –
$17.6 billion), similarly reflecting an improvement in underlying performance.

The Italian player's capex is expected to be under €9 billion ($9.9 billion), lower than previous guidance of €9.2
billion ($10.1 billion) and original guidance of €9.5 billion ($10.5 billion), resulting from continuing optimisation
and efficiency measures. Regarding the firm's balance sheet, leverage is expected to remain within the stated
range of 10 – 20 per cent.