Eni SpA ( ENI (BIT:ENI).MI), the Italian multinational oil and gas company, reported a robust third-quarter performance, underpinning its strategic resilience in the face of volatile global energy markets. Chief Transition and Financial Officer Francesco Gattei emphasized the company's ability to navigate the challenging environment, with a pro forma adjusted EBIT of €3.4 billion and a cash flow from operations of €2.9 billion for Q3, despite a 14% year-on-year decrease.
Strategic investments, including KKR's €2.9 billion stake in Enilive and the sanctioning of two biorefineries in South Korea and Malaysia, marked key developments. Eni also advanced its upstream operations and restructuring plans for its chemical segment, Versalis, aiming for a positive EBIT by 2027.
Key Takeaways
- Eni's Q3 pro forma adjusted EBIT and cash flow from operations both fell by 14% year-on-year, reflecting tough market conditions.
- Debt and leverage have been reduced ahead of schedule, with a target pro forma leverage ratio towards the lower end of 15%-25% by year-end.
- KKR invested €2.9 billion for a 25% stake in Enilive, supporting Eni's growth in the transition sector.
- Upstream operations remain strong, with new gas production and approvals for developments in Indonesia.
- Versalis is undergoing restructuring to focus on high-value products, aiming for positive EBIT by 2027.
- Eni expects full-year upstream production around 1.7 million barrels per day and gross CapEx below €9 billion.
- Shareholder distributions are prioritized, with an increased share buyback plan of €2 billion for 2024.
- Dividends from associates are expected to exceed net income by about 25%, and the cash tax rate is expected to normalize to the low 30s.
- Eni may consider selling an additional 5%-10% stake in Enilive following KKR's investment.
- The company anticipates €3.6 billion in net M&A cash-in for 2024, with €2.5 billion expected from additional disposals.
- A €2 billion distribution has been announced, reflecting a move to a lower leverage level and a sustainable distribution level.
- Planned investment for the chemical sector has increased to €2 billion for 2024-2027.
- A hybrid bond was issued related to the Congo LNG project, optimizing financing for floating LNG vessels.
- Upstream equity contributions showed a 4% sequential EBIT increase, despite lower oil prices.
- Executives discussed financial strategies and operational updates, including the valuation of Enilive and the restructuring of Versalis.
- The company is exploring potential IPOs, including the Plenitude IPO, and may increase partners in Enilive while maintaining a controlling stake.
Company Outlook
- Eni's full-year outlook includes expected upstream production of 1.7 million barrels per day.
- Gross capital expenditures are confirmed to be below €9 billion for the year.
- The company's financial position remains strong, with a focus on shareholder distributions and cost savings.
Bearish Highlights
- The chemical segment, Versalis, is facing significant restructuring due to ongoing losses.
- The breakeven EBITDA target for 2025 for Versalis is now considered unlikely.
Bullish Highlights
- Eni's upstream operations are noted as a competitive advantage, with new gas production already underway.
- The company has seen improvements through portfolio restructuring and new platform development.
Misses
- Eni reported year-on-year decreases in pro forma adjusted EBIT and cash flow from operations for Q3.
- Some projects have been canceled or delayed, although there are no delays in capital expenditures.
Q&A Highlights
- Francesco Gattei discussed the possibility of selling an additional stake in Enilive and the valuation of the company in the biofuel market.
- Questions were raised about the company's buyback strategy, European refining, and potential drilling initiatives in Egypt.
- The impact of Italy's windfall tax on the energy sector was clarified, and it does not affect Eni.
Eni's Q3 earnings call has demonstrated the company's adaptability and strategic foresight in a period marked by significant market fluctuations. With a strong focus on transitioning to sustainable energy sources, optimizing financial strategies, and maintaining a robust upstream portfolio, Eni is positioning itself to navigate future challenges while delivering value to its stakeholders.
InvestingPro Insights
Eni's financial performance, as reported in their Q3 earnings call, aligns with several key metrics and insights from InvestingPro. The company's market capitalization stands at $47.79 billion, reflecting its significant presence in the global energy sector.
Despite the challenging market conditions mentioned in the earnings call, Eni maintains a solid financial position. The company's P/E ratio of 18.29, and an adjusted P/E ratio of 12.91 for the last twelve months as of Q3 2024, suggest that the stock may be reasonably valued considering the industry's current dynamics.
One of the InvestingPro Tips highlights that Eni has maintained dividend payments for 29 consecutive years, which aligns with the company's emphasis on shareholder distributions mentioned in the earnings call. This long-standing commitment to dividends is further supported by the current dividend yield of 4.8% and a dividend growth rate of 7.61% over the last twelve months.
Another relevant InvestingPro Tip notes that Eni's earnings per share have grown over the past year, which is particularly noteworthy given the 9.27% revenue decline over the same period. This suggests that the company has been effective in managing costs and improving efficiency, as echoed in the earnings call discussion about cost savings and portfolio restructuring.
The company's revenue for the last twelve months as of Q3 2024 was $102.65 billion, with an EBITDA of $18.26 billion, showing a growth of 14.12%. This EBITDA growth is particularly impressive considering the revenue decline and aligns with the company's reported ability to navigate challenging market conditions.
Eni's focus on transitioning to sustainable energy sources is reflected in its strategic investments and restructuring efforts. The InvestingPro data shows an operating income margin of 9.4%, which, while modest, supports the company's ability to fund its transition initiatives and maintain shareholder returns.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and metrics that could provide deeper insights into Eni's financial health and future prospects. Currently, there are 17 additional InvestingPro Tips available for Eni, which could offer valuable context for the company's performance and strategy.
Full transcript - Eni S.p.A (E) Q3 2024:
Operator: [Starts Abruptly] 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. [Operator Instructions] I'm now handing you over to your hosts to begin today's conference. Thank you.
Francesco Gattei: Thank you. Good afternoon, and welcome to Eni's third quarter and nine months 2024 results conference call. Energy markets continue to be volatile and unpredictable, driven by a mixture of fundamentals, geopolitics, and speculative trading flows. Our focus is on maintaining resilient and competitive operating and financial performance, reinforcing our balance sheet while funding both investment into the business and attractive distributions to shareholders and progressing our strategy. In the third quarter, we clearly continued to deliver on all those objectives. In Q3, we indeed reported resilient results, with pro forma adjusted EBIT of €3.4 billion and cash flow from operation of €2.9 billion, despite the deterioration in scenario across most of our main businesses. We also lowered debt and leverage well ahead of our original plan. I will speak in more detail on our results shortly. Let me focus on strategic activity. We are executing at pace around a clearly defined portfolio of businesses. Those businesses are both Transition oriented and where Eni has clear competitive advantages and where we can generate competitive growth and returns. Starting with the Transition satellites and Enilive specifically, we are delighted to have confirmed the investment by KKR into Enilive. The €2.9 billion investment for a 25% stake supports our growth and confirms the value already created. Similar to our Plenitude transaction earlier this year, it accesses a new pool of aligned capital more appropriate for the different growth and risk profile of the business. Furthermore, that growth is clear. In Q3, we sanctioned two biorefineries, South Korea and Malaysia, and confirmed that the construction work at Livorno will begin soon. And we will start our first biojet plant in Gela at the end of this year. Upstream continues to be an area of significant distinctiveness and competitive advantage. In August, we began gas production at Argo-Cassiopea offshore Sicily. Production net zero on scope 1 and 2 will quickly ramp up into the winter contributing to gas supply for Italy. Johan Castberg and Baleine Phase 2 will start up before the end of the year, contributing to reach our production targets. Also in August and only 10 months after the discovery of Geng North, Indonesian authorities approved our Plan of Development of the Northern Hub in the Kutei Basin, as well as a significant extension to the plateau at our Southern Hub centered around the existing Jangkrik FPU. Together, these two hubs will account for over 400,000 barrel per day and Eni's equity is over 80%. Additionally, we have identified over 30 TcF for near-field exploration potential, offering potentially very material upside. The scale of this opportunity underpins our growth potential beyond the end of the current four-year plan, and of course, offers the opportunity for some early monetization via our proven dual exploration model. While Plenitude and Enilive are currently our main Transition satellites, Q3 also saw an important milestone in the development of a new one, CCUS. First CO2 injection began at our Ravenna project here in Italy. This is the first plant able to capture more than 90% of the CO2 emitted by our upstream plants. At the same time, we secured the key milestone of agreed government funding on our HyNet CCS project in the U.K. As a reminder, we are looking to build over 15 million tonne of capacity before 2030, and grow that to over 40 million tonne in the 2030s and it is an ideal vehicle for a tailored satellite structure. Turning now to our Q3 results in more detail. We reported pro forma adjusted EBIT of €3.4 billion and cash flow from operation of €2.9 billion, both down just 14% year-on-year despite a deterioration in the scenario. Our Upstream businesses were the standout contributors to our results this quarter. Our satellites and associates made up over one-third of our EBIT. Finance expense remains low even before debt begins to fall materially, while the tax rate at 51% was consistent with this quarter's oil price and earnings mix. Cash flow from operation for the quarter was €2.9 billion, giving €10.7 billion for the nine months, a consistent conversion of profits into cash. This has served to cover a working capital build, CapEx, net M&A, the dividend and a portion of the buyback to date. After the effect of the cash out for Neptune in Q1, net debt has fallen in Q2 and Q3 even with only modest divestment income. We'll see an acceleration of this reduction in the coming quarters. CapEx for the quarter was €2 billion, and for the nine months was €6.1 billion, minus 10% versus last year. We expect to be below €9 billion for the year even taking into account the seasonally normal uptick of the first -- of the last quarter. Net CapEx was €1.6 billion in the quarter and should be below €6 billion, assuming the cash inflow of agreed transaction waiting to close at year-end. In Global Natural Resources, E&P contributed €3.2 billion of pro forma EBIT with results resilient in the face of lower crude prices and helped by production up 2% year-on-year. GGP delivered a strong quarter for the summer months, helped by an improving price scenario and hub spreads and confirming robust results even in a year of limited volatility. In the two key Transition businesses, Enilive delivered strong biorefining throughput growth and excellent utilization. EBIT was hurt by the weak bio scenario, but marketing made a stronger contribution. Plenitude is also contributing -- continuing along its planned growth trajectory. Year-on-year EBIT was lower versus 2023, but it will beat our budget results on a yearly basis. Net debt and leverage in the quarter were both down and we remain comfortably below the top end of the plan, 15%-25% leverage range, despite closing only one major divestment in the quarter, while also stepping up our share buyback and paying a portion of the remaining outstanding extra profit tax balance. But as we've discussed at Q2, that is not the full story. We have been advancing our portfolio activity faster and for greater value than we anticipated and planned for. Our expectation is that by year-end, pro forma leverage will be towards the bottom of that range. Shareholder distribution remain our first priority. In September, we paid the first tranche of the annual €1 dividend, plus 6% versus last year. Our buyback in the quarter totaled €560 million or 1.3% of shares in issue, which are now down 12% since we restarted the program in 2022. As we reduce shares in issue, this adds further along with the business performance and the balance sheet strength to the quality and value of our dividend. With that balance sheet improvement in mind and the continuing success in our portfolio program, we also confirm today an increase in the 2024 share buyback. We now plan to repurchase €2 billion in the program, an increase in €400 million, delivering on our raised commitment announced at Q1 and in addition, reflecting the better than planned progress in our M&A. At today's share price, our distribution yield is 11.5%. Our efforts on growing new transition business has broader implication. It is also an opportunity to build new highly-attractive opportunities around our chemical sector. Fixing the result of this loss-making segment will be a significant contributor to the earnings and cash flow potential we see for Eni going forward and is a real priority for us. Since March, we have been developing a detailed plan, which we now want to take the opportunity to share with you. We also had the opportunity to share this with the unions. Versalis has accumulated material losses over the past years and this negative trend has continued through 2024. Our response is one of both restructuring and transformation. The future platform of Versalis will have a significantly different profiles, one focused on a high value downstream portfolio of compounding and specialized polymers, one on biochemistry and on circular economy, a portfolio more consistent with Eni technology-led strategy focused on competitively advantaged businesses into the transition. This transformation can leverage the resource of a highly-skilled workforce, but dedicated it to higher value and more sustainable activities. At Priolo, we are evaluating constructing a biorefinery for SAF in the chemical recycling plant, employing our HOOP technology. At Brindisi, we target to continue polymer manufacture by using cost advantage imported raw materials and we will convert part of the site to the construction of a new factory facilities for the manufacturing of stationary networked batteries. In the meantime, we plan to shut down cracking at both Priolo and Brindisi. We will also look to exit or significantly reduce our exposure at Dunkirk. This is a necessary response to the structural disadvantage European basic chemicals manufacturing faces versus other regions. And we will reduce polymer capacity by ceasing polyethylene production at Ragusa. You will be aware, we closed operation at Grangemouth earlier this year. Further initiative to drive efficiency in polymers might also be taken. The European chemicals industry has further deteriorated in 2024 and it is not expected to improve in 2025. In this context, our expectation is to move to positive EBIT in 2027 and free cash flow breakeven in 2028. We are comfortable on the ultimate success of this turnaround as we face similar issues over a decade ago in our refining operation. The transformation path we chose then biorefining, evolved into Enilive, with the resulting scale of ensuing value creation we have been able to specifically highlight today. Moving to guidance. Full year Upstream production is expected at around 1.7 million barrel per day, the middle of the original guidance, reflecting the expected impact of OPEC+ quotas. GGP pro forma EBIT is raised again to €1.1 billion while we confirm our Transition businesses to deliver EBITDA of €1 billion each. Group pro forma EBIT and cash flow from operation expectation have been reduced from Q2 on the lower scenario assumption, but reflect outperformance versus the original plan of more than €1 billion in each case. We can confirm gross CapEx below €9 billion and net CapEx well below €6 billion, and I have already discussed the outlook for leverage. And this provides the setting for the raised buyback to €2 billion from €1.6 billion and €1.1 billion in the original guidance. For the purpose of modeling our cash flow from operation for the fourth quarter, you should assume dividend from associates exceeding net income by around 25%, a relationship that also holds for the full year, while the cash tax rate will revert to a more normal level in the low 30%s down from Q3. To summarize, Q3 represents a very good quarter amid a volatile and challenging environment. We have significantly advanced strategy developing growth in advantaged business and securing value. We are addressing underperforming activities with the prospect of materially improving financial performance, and we continue to pursue our cost reduction program that has already achieved the €300 million of saving that we planned for this year. Our recently announced reorganization reinforces our actions in each of these aspects, but critically, our financial performance continues to be highly competitive and resilient. Indeed, we are now positioned in an historically strong situation financially and strategically, and this is confirmed in our decision to raise our 2024 share buyback. That ends my remarks. And now together with Eni top management, I am ready to answer your questions. Thank you.
Operator: This is the conference operator. We will now begin the question-and-answer session. [Operator Instructions] The first question is from Josh Stone with UBS. Please go ahead.
Josh Stone: Thanks, and good afternoon. Two questions please. Firstly, on Enilive, and congratulations on getting the deal over the line at a still attractive valuation. At the time of the initial agreement, you highlighted the potential to maybe sell another 10% of that business, but given you sold the higher end at 25% to KKR, can you just update us how much of a priority is that for Eni today? And then, second question on the petrochemical restructuring and you provided some helpful slides on that. Thank you. Maybe just talk about the path towards profitability from here. How soon should we expect to see a benefit from some of these initiatives, in particular closing some of these less competitive crackers? And also maybe what was the response from the unions or what has been the response from the unions so far on this? And is your target still to reach breakeven EBITDA in 2025? Is that still valid? Thank you.
Francesco Gattei: Okay. Thank you, Joshua. I will answer to the first question about Enilive, and I will leave the floor to Adriano Alfani for the chemicals. On Enilive, clearly, you remember, currently, we had -- once we announced the exclusive agreement for negotiation with KKR that we have the range of 10 -- sorry, 20% to 25% of disposal and from 5% to 10% of the additional potential interest or stake that could be, let's say, put on sale. Clearly, having the 25%, we are now moving to the lower end -- to a lower part of the range of the 5% to 10%. So, we wanted to see if clearly there is an opportunity to, let's say, eventually bring another partner with a smaller stake, clearly not at 10%, because we will have, let's say, a large disposal of 25%-plus and additional 10% if we move to the top end of the both options. This is the reason we move -- we think that it is more appropriate to keep the lower percentage as a reference. And now, I leave it to Adriano.
Adriano Alfani: Thanks, Josh, for the three questions about the chemical piece. Let me start with the first one about the improvement in the result that we expect. To be honest with you, from a market point of view, we don't expect a significant improvement. We still see a grim outlook. There is no meaningful economic recovery at this time for the 2025 and also for the end of 2024. So, the improvements that we expect in the economics of Versalis are mainly coming in this context of scenario from action that we are going to put in place. That means, restructuring the base chemical portfolio, and on the other side, developing and growing the new platforms that Francesco was referring in his speech. How fast the improvement will come? Clearly, gradually, and depending on the speed that we are going to execute all the intervention from restructuring point of view, that we see over the next four, five years gradually improving. Of course, an improvement in the scenario in term of possible recovery will help in order to have a bolster in execution plan, but at this moment, we'd like to be a little more, let's say, [indiscernible] in the outlook from demand point of view for the reason that I was explaining based on some developing in the market, automotive sector in Europe, construction, and so on. In term of response from union, every time that, of course, you present an aggressive plan, this was a pretty aggressive plan in term of restructuring, there are many questions. Fundamentally, they understand that the time for the base chemical situation in Europe is extremely challenging. And, of course, the company cannot continue in losing cash, and so something must be done. And so, they are fundamentally onboarding in order to do many different actions in order to improve and to create sustainability for the future, not only in term of economic sustainability, but also in term of, of course, people sustainability, in term of employment and so on. From an EBITDA point of view, that is the third question, for 2025, at this moment, it is unlikely that we can be breakeven EBITDA in 2025 in this context of a scenario, but, of course, in case of improvement, I mean, we can target in order to be significantly better than in 2024 in the performance of EBITDA for 2025.
Josh Stone: Okay. Thank you.
Operator: The next question is from Alessandro Pozzi, Mediobanca (OTC:MDIBY). Please go ahead.
Alessandro Pozzi: Thank you for taking my questions. I have two. The first one is on disposals. So, three year, this year we have €3 billion of cash-ins. You've done -- you've announced a lot of transactions, but based on what we read in the press, there's a lot more that potentially is going to come through in -- maybe in 2025. And I was wondering if you can help us to understand how much of the cash-in could be next year. If we use -- again €3 billion, is it a good assumption? And also, if you can maybe give us a bit more color on what you have maybe at the moment, the opportunities that are more mature compared to others in terms of disposals if you can? The second question is on Indonesia. You mentioned in the opening remarks that you received approval from new development plans and I was wondering what sort of activities we could see in Indonesia next year. You mentioned 400,000 barrels potentially could be achieved by the end of the plan. I was wondering what is the shape of the production growth that we could see from Indonesia in the next few years? Thank you.
Francesco Gattei: Okay. I will answer to the first question about the disposal and then I will leave the answer to Guido Brusco for the Indonesia activity. Apart on disposal, you know that we have a net M&A cash-in expected in this -- in 2024 or €3.6 billion we raised versus the original assumption. Clearly, this includes not only the cash-in coming from the disposal, but also the cash out that was mainly concentrated at the beginning of the year once we paid the acquisition of Neptune and a smaller acquisition in the renewables segment. For next year, the expectation is to have additional disposal that are maturing and these are the origin of the expectation we have on the leverage pro forma and the range of cash-in that we can expect next year is around the €2.5 billion. So, these are the two figures to keep in mind. This is clearly coming from the disposal. There could be some smaller additional disposal and acquisition that we consider, let's say, covering or offsetting each other. And now, I'll leave to Guido the second answer.
Guido Brusco: So, thank you -- first of all, thank you for the question. And let me start with providing some more background on the scale of the asset in Indonesia. So, first of all, this year, we've completed our evaluation of the discovery of Geng North that is confirming a potential of 5 Tcf of gas. And of course, the scale of this discovery is creating a critical mass also for the development of some resources discovered and acquired as a part of the transaction we did last year with Chevron (NYSE:CVX). The discovery resources of that transaction accounts for a number close to another 5 Tcf, which, of course, will be complementing the Geng North discovery. So, if we consider both the plan of development for the North Hub, which is Geng North and those discoveries, plus the additional resources that we'll bring in into the South Hub, we envisage a combined production at [regime] (ph) of over then 400,000 barrel of oil equivalent per day, which is give and take 2 Bcf of gas and 80,000 barrel of condensate. On top of that, we have an exploration potential, which we estimated in a region of -- of course, unrisked, of 30 TcF of gas, which we have significantly derisked by the nearby discoveries. Clearly, the discovery of Geng North have allowed a more detailed reconstruction of the geological model. And now we think that this potential is well and better and unrisked. And so, we are targeting also quite a significant number of exploration wells in the basin in the next four years. So, that's in a nutshell what will look like the Indonesia asset in the forthcoming years. To come to your question, and of course, we can leverage on the existing facilities and the excess capacity of the liquefaction plant of Bontang, which is nearby and which has a total capacity of more than 20 million tonnes per annum with only three trains operational of 10 million tonnes per annum and utilization of less than 60% last year. So, we can clearly leverage on that. And as you know, we are in the premium market. To come to your question, which is the activity we are doing, we are now in the front-end engineering design of the facilities. We are also starting -- we have already started drilling activity in August to develop some fields discovered close to the South Hub, namely Merakes East. And the rig, of course, will continue the activity in the South Hub in 2025 and 2026. While we will take very likely by the end of the year or beginning of the next, [an FID] (ph) on the North Hub.
Alessandro Pozzi: Thank you. Just on the 400,000, how much will it be for domestic, let's say, sales and how much do you think you can export to Bontang?
Guido Brusco: On the -- this is a number which evolves over time, but on the entire life of the field, the domestic component will be in the region of 25%, 30%.
Alessandro Pozzi: Understood. Thank you very much.
Operator: The next question is from Giacomo Romeo with Jefferies. Please go ahead.
Giacomo Romeo: Thank you. Two questions for me. The first one, Francesco, is on distributions. Your €2 billion that you got today, that's ahead of your CFFO distribution range. Just trying to understand how to think about these in the context of your now lower -- moving into a lower level of leverage. Do you think that this upper level is what is effectively sustainable in the current with -- in the context of the current pro forma leverage? The second is on chemicals. I'm just trying to reconcile the €1 billion CapEx that you announced at the CMD that was for the '24-'27 period, with the €2 billion that you now have for the five years, do you think that you're just going to need more investment to get to that free cash flow breakeven level? Is it a timing issue? And when is the -- when do you think is the right time to bring in a partner in these assets? Thank you.
Francesco Gattei: Okay. On the distribution, yes, it's correct that clearly, we are above the 35% limit. If you remember, we came through this number through different steps. So, the first step was in the first quarter, once there was an expectation or revision in particular scenario that raised the amount of cash flow we are expecting for this year and we shared according with what we have already announced in our distribution policy, the 60%, the 60% of, let's say, upside. And this has brought our distribution from -- sorry, the buyback part of the distribution from €1.1 billion to €1.6 billion. Then, in July, we announced that taking into account of the highly acceleration, the high acceleration and materiality of the disposal plan, we were able to consider to bring that percentage of distribution of the cash flow that was originally the 32% applied to the cash flow from operation generated with the scenario we are assuming in the second forecast up to the limit of 35%. This has, let's say, brought the potential, the additional distribution to more -- an additional €500 million. So, the €1.6 billion could have been raised up to €2.1 billion. We decided to distribute to reach the €2 billion that we announced today. That is equivalent now to revise the cash flow from variation because of the scenario to something in the range of 37%, 38%. This percentage could be, let's say, sustainable in the future. Clearly, it's part of a discussion we will see next year with the new plan. So, take into account all the various element that will, let's say, characterize the new plan, the scenario, the CapEx, the activity, the portfolio, et cetera, et cetera, but on a general rule, the idea is that we want to reinforce the company. The company will be reinforced by growing, diversifying its business, maturing new business lines and enhancing -- or bringing back to profitability other negative lines. And all this will help to have a larger distribution, a progressive distribution. So, I cannot answer you specifically on figures, but I can answer you on a qualitative term and the principle that will drive our distribution policy. And now, Adriano, for the other question on chemicals.
Adriano Alfani: Yes. Thanks, Giacomo, again for the question. So, let me go back to March when we announced the preliminary plan in terms of restructuring of the chemical portfolio. At that time, we had an outlook for the market and based on the outlook for the market, we estimate that over the four-year plan, we were in needs of roughly €1 billion of investment for the chemical sector in order to transform so to restructure some piece of the chemical sector and in order to develop a new platform that are still the same platform that we are talking today. As Francesco was mentioning during his speech over since March, we spent a lot of time based on the fact that some markets change based that, in some cases, we see more growth compared in some market application than what we see before, in some case, like I don't want to talk always about automotive, but of course, automotive is another piece that, in terms of exposure of the chemical sector is also important because in the car production goes many different chemical products. So, we review completely the entire portfolio in terms of the market and opportunity to grow in the market and where to eventually reduce participation. And we increase, in some shape or form, the area of restructuring of the base chemical portfolio because we strongly believe that the base chemical portfolio in Europe is in a very irreversible situation in terms of economics. So, we decided to broaden the scope in terms of grow the three platform, but also to develop new platforms like the stationary storage battery that we are talking about. And including this new activity, new platform and also the biorefinery in Priolo, we arrived to estimate €2 billion. We are not in the position today to do the breakout of -- the breakdown of this €2 billion, but this is how we move from the €1 billion to the €2 billion today.
Giacomo Romeo: That's clear. Thank you.
Adriano Alfani: You're welcome.
Operator: The next question is from Kim Fustier with HSBC. Please go ahead.
Kim Fustier: Hi, good afternoon. Thanks for taking my questions. I've got two, please. Firstly, could you discuss the significance of the new business structure announced last month? Basically, what does it allow you to achieve or achieve differently compared to the previous structure? Secondly, could you give us an update on your plans for the U.K. North Sea now that the combination with Ithaca has completed? Thank you.
Francesco Gattei: Yes. About the new structure, the new strategy is substantially an evolution of the previous one. You remember that whilst there was -- the previous, it was based on the natural resources and energy evolution and energy evolution and the scope of creating the platforms that substantially helped to generate, I would say, almost €4 billion of cash coming from Enilive and planning to the reduction or disposal of our minority stake. And clearly, that was the opportunity to transform from -- particularly from the point of view of the biorefinery certain sites, and therefore, having a structure of businesses that could have, let's say, could capture the interest of new investors. So, the new structure that is coming is an evolution of that energy evolution original model. As that has matured in specifically Enilive and Plenitude and now is moving to having a partner that is clearly a financial partner and has a main goal, the road towards an IPO. For this reason, the decision was to bring this inside the CFO structure. On natural resource, it was decided to improve even further the centrality of the technical capability and the trading capability. For this reason, all the engineering activities centralized under that structure that is now called Global Natural Resource and with the trading activity that is entirely inside that responsibility. Finally, transformation, industrial transformation is clearly now focused on the key dossier of transforming the chemical, creating a similar positive evolution that we saw in the refining -- in the traditional refining system and continuing to transform the refining system that clearly has other activity to be deployed in order to add additional biorefining capacity and in particular in certain sites, and therefore, to reinforce further our Enilive future business. This is the scope, and we think the advantage of having three structures focalized in different segments of business. About our completion of Ithaca, the Ithaca deal, Ithaca is another opportunity. We had a portfolio that was cash generative, but was, let's say, short in terms of opportunity of new projects. We think there is synergies from the operational point of view, but also clearly from the financial and fiscal point of view. And we believe there will be also, in this difficult environment, still some, let's say, opportunity to grow our oil and gas presence in U.K. Clearly, for us, U.K. is becoming a country where we are not just focused on oil and gas, but where we are a major player in CCS and in the renewable space. So for us, this is a strategic position on a broader span of business. Thank you.
Operator: The next question is from Biraj Borkhataria, RBC.
Biraj Borkhataria: Hi, thanks for taking my questions. First one is just a follow-up on the U.K. again. There's obviously some uncertainty around the tax and the capital allowances in the U.K. So could you just remind us what the expected CapEx budget for that entity is next year? And whether you can talk to any sort of flexibility that you have if the rules are more harsh than expected? And then the second question is just on going through the statements, it looks like you issued another hybrid, which doesn't look like a retender, I think it's a new one. And the commentary suggests that it's for FLNG (OL:FLNG) vessels. So just wanted a bit of color on what exactly that was for, and why you chose that route of financing? Thank you.
Francesco Gattei: On the first question, it's very easy, I suggest you to direct these questions directly to the Ithaca management. They will present the results and also the plan for the next year is something that is clearly in their responsibility and the disclosure. We cannot anticipate a disclosure that still is difficult for us to present our plan, speaking about someone else that is doing his job, it's even more difficult. About the hybrid you are referring, this is relating to the floaters LNG. Originally, this is a project that we are -- is the Congo LNG project. Remember, that was two floating LNG. One was, let's say, the smaller scale and the large scale, one was both, the other is under construction. And substantially this hybrid was a sort of synthetic financial tool to replicate a leasing model. Originally, the idea for us was to have floating LNG, so a ship that was under lease. It was the plan that we had once we sanctioned the project was 2022, at the beginning of 2022, then condition in the market changes. Remember, 2022 was the year where the invasion of Ukraine changed a lot of things, and therefore, we had to accelerate and to buy that ship. In order to have a model that is substantially replicated from the financial point of view, an installment of payment of, let's say, a number of years to cover the cost of that ship or the CapEx related to that ship. This is -- the hybrid bond is a solution that is substantially reproducing also from the financial point of view in a better way, in a much more optimal solution, what we designed as the original plan for that ship.
Biraj Borkhataria: Okay. Thank you.
Operator: The next question is from Irene Himona, Bernstein. Please go ahead.
Irene Himona: Good afternoon. Thank you. Congratulations, first of all, on the strategic delivery. I have two questions specific to Q3. First of all, on cash flows. The cash tax rate increased more than 10% this quarter. I presume this includes more windfall tax installments. Can you say what remains to be paid in Q4, please? And whether that completes the bill or if there is more payable next year? And then secondly, your upstream equity affiliates EBIT increased about 4% sequentially despite the weaker oil price. Can you say what is happening there? What drove that strength between Q2 and Q3, please? Thank you.
Francesco Gattei: Yes. On the payment related to the windfall tax, we have last installment on -- of €240 million in the -- in November. So that should hand the number of payment we did and will substantially reach the level of €2 billion that we paid between 2022 to 2024. So that is the last step. About the EBIT contribution, I think this is mainly related to the some of our upstream entities, and we can provide you more detail with the Investor Relations team.
Operator: The next question is from Matt Smith, Bank of America. Please go ahead.
Matt Smith: Hi, good afternoon. Thanks for taking my questions. I have two, please. Just firstly, I wanted to come back to the buyback. You've increased it twice this year quite substantially each time. I mean, given you've built a lot of visibility on balance sheet improvement, I wondered if increased visibility and stability might be an outcome for the buyback as well and perhaps certainly one way to reduce the complexity in the buyback mechanism might be to offer a recurring stable buyback in euro million terms. I just wanted to test whether that's something that you would see any advantage to? Or conversely, are you keen to retain the flexibility that a payout ratio gives you? So that would be my first question. And then my second question actually I wanted to turn on to European refining, if I could. I appreciate this isn't comparable to Versalis from an Eni financial perspective, but it does seem to be an industry that's facing some structural headwinds as well as cyclical ones at the moment. Just wondered if you'd be willing to comment your thoughts on the market and whether you think rationalization might also be required in this sector to see any sort of tangible improvement in the outlook from here? Thank you.
Francesco Gattei: Okay. On buyback, clearly, by definition, buyback is a flexible tool. I think that there is not a fixed route for buyback. What we think is a relatively simple model that we declare a certain percentage of distribution in -- or a range of distribution in cash flow from operation that is, let's say, clearly split between dividend and buyback. And we say that buyback will improve following additional upside coming from execution or from scenario, 60% upside. And on the other side, there is still a possibility as we did this year to evaluate with the Board the opportunity to, let's say, bring this percentage or evaluating this percentage in a different way than what we did at the original plan because there is an improvement of -- and clearly, we have the floor once we announce the, let's say, the distribution policy or we upgrade the distribution policy during the year, and so then it is a sort of a decision that will be protected from practically all the scenario to the balance sheet. So this is the model. I think that this is a quite attractive model, and we do not -- we cannot be so deterministic because the life unfortunately cannot be predicted at 100% and the volatility of the oil market is extremely high. I leave now to Pino Ricci for the answer about the downstream refining.
Giuseppe Ricci: Thank you, Francesco. What we have done on refining in the last 10 years was to reduce the disposal of refining on a European market through the creation of the biorefining one side and the diversification in the Middle East with the U.S. This strategy allow us not only to create Enilive with the high value that we have seen today, but also to maintain the positive result in the third quarter of this year with a margin very, very low because today, our term was 1.7% in third quarter '24, $10 less than the same quarter of last year. And notwithstanding this, we are in a positive region with refining. What we expect in the next months and years for refining margin in Europe, of course, is a situation with slightly better than this quarter, but in any case, not so bullish and that it means that confirm that our strategy is very correct and the recent shutdown of Livorno for the transformation in biorefinery help us to have the further reduction in this exposure. So at this point, we are at the minimum capacity of refining just able to cover the request of the marketing of Enilive and we are in equilibrium. In the next years, we will see further transformation. But the most important thing is that this is a success story that we have to repeat in the chemistry.
Matt Smith: Perfect. Well, thank you very much.
Operator: The next question is from Michele Della Vigna, Goldman Sachs. Please go ahead.
Michele Della Vigna: Thank you very much, and congratulations on the strong results and the progress on disposals. Two questions, if I may. The first one is on Egypt. The country clearly is in a deep energy crisis. They are now importing LNG pretty much all year around. I was wondering if there is a lot you can do in terms of extra drilling and exploration to continue to supply more gas as you have consistently done in the last few years? And then secondly, I wanted to come back to biofuels. It's clearly a very successful business you've created there. This year has been tougher in terms of margins. One of the drivers that could tighten the market over the next two, three years could be the implementation of the RED III directive country by country in Europe. I was wondering if you could give us any visibility when you think Italy may actually apply the tighter RED III standard and therefore raise the renewable diesel demand in Italy. Thank you.
Francesco Gattei: Okay. First question is for Guido and the second one for Stefano Ballista.
Guido Brusco: Thanks for the question. First, let me give you some more color on what is the domestic situation, economic situation in Egypt, which, of course, we constantly monitor. So, we see positive signals. There have been material investment deals done recently and financial support packages have been provided by essentially mainly from UAE, $35 billion, but also IMF and EU for $15 billion in total. So it's a package of $50 billion, which has improved significantly the financial position of the country. But there have been also economic reforms made. In March, Egypt has allowed the local currency to freely float. And this has provided some stabilization on particularly the hard currency reserves of the country. But more importantly, starting in August, subsidies on electricity have been progressively reduced and also subsidies of automotive fuel have been reduced, so enhancing further the financial position of the country. And recently, the new cabinet announced further structural reform to provide a better perspective to the country. Coming to Zohr and the gas production, clearly, the overall situation of the country wasn't good till six, nine months ago. So, most of the international operator reduced [Technical Difficulty] completely the activity, and this resulted in a severe drop in the production. Now, with this improved situation with the country providing more reliable payment paying the material use and recovering the outstanding payment, activity is restarting. And as far as Eni concerned, we have several production optimization activity being foreseen and being implemented in most of our field, onshore and offshore. And particularly for Zohr, we are envisaging a rig coming at the end of the year to start activity beginning of next year to restore some production over there.
Francesco Gattei: Next, for the...
Stefano Ballista: Yes, Michele, thank you for the question. As you said, right now, actually, the third quarter experienced the lowest margin ever seen before. Reason is the supply/demand imbalance. But actually, as you mentioned, there are clear mandates and regulation coming in place with decisions already taken. RED III, the Renewable Energy Directive #3 is one of that. And you have to look at that in a wider context of other supporting mandates. Focusing on the Renewable Energy Directive #3, it's going to get defined the growing path in terms of GHG reduction starting from middle of next year. What I would expect is to set new target starting from 2026. And this is going to be true for Italy and for other country. Then the path in order to get from -- just to remind some number from 14% that is current renewable energy directive up to 29% is going to be probably a quite linear phase in along the years. Another element that I want to highlight in any case is that, even now we already know that next year, focusing on Italy, the target, the GHG -- the energy content target has been already increased by about 1%. This year is 10.8%, next year is going to be 11.7%. This is coming from the current renewable energy directive that is keeping its own path. So it's going to be an add-on on top of the increasing target we already are experiencing. On top, we have an already defined mandate on pure HVO, so 100% HVO. That one is going to increase by 100,000 tonne next year in Italy. And there is already defined and approved path in order to reach 1 million tonne with a step up by 100,000 tonne per year in the following years. So actually, an increased path -- demand increase path is already in place.
Michele Della Vigna: Thank you.
Operator: The next question is from Peter Low, Redburn Atlantic. Please go ahead.
Peter Low: Thanks. Yeah, another one on the KKR deal for the stake in Enilive. The valuation you achieved was really quite impressive given what's going on in the market. Can you perhaps talk a bit about what makes Enilive unique or particularly well positioned in the biofuel market? And kind of what -- kind of why KKR was willing to kind of pay such a level? And then just separately, on organic CapEx, you're now saying that's going to be kind of below €9 billion this year. What are the moving parts there that means that's coming in lower than you had initially expected? Thanks.
Francesco Gattei: About the valuation of Enilive, I think that the competitive advantage or the structure that we designed and substantially give to Enilive a quite compelling investment case rational because it give you exposure to the growth business of biofuels with tightening of regulation, the opening of the soft markets and all the changes that could emerge from a demand point of view, in particularly with more and more request of HVO also for shipping or rather usage are the traditional activity. What is the advantage? To mix this growth opportunity together with the stabilizing quality of our retail. So, you are substantially able to travel in this difficult transformation of the transportation model, but you are granted by the fact that there is 1.5 million clients that are coming to our 5,000 service station buying fuels, buying goods, looking for additional services, et cetera. And this is the reason you see the result of Enilive much more stable even in a difficult market environment than other competitors. So I think that this is where the difference is. And the fact that substantially, you can grow, let's say, with a protection that allow you, in any case, to have other elements that generate cash. So another factor that you not only have a sort of hedging through this retail contribution, but also to have a cash availability that will help you to have capability to fund our investment and also to have a certain distribution potential in your hands. I believe this is the real, let's say, reason for having such a level of evaluation. About CapEx, the fact that clearly, we are improving on a yearly basis the expectation, there is a step-up in the last quarter that is generally a natural process following the evaluation of FIDs during the year, and you have down payment once you take FID. I think this is a normal and historical trend that you could see. Clearly, we said that we will be around 9%, below 9%. It could be something that clearly show in any case, an improvement versus the expectation that we had once we announced the Capital Market Day.
Peter Low: Thank you.
Operator: The next question is from Massimo Bonisoli, Equita. Please go ahead.
Massimo Bonisoli: Good afternoon. Two questions, please. One on Versalis. To better understand the capital discipline, can you provide at least some qualitative indication on the €2 billion spending for the restructuring of Versalis? Roughly how much is related to all brands and how much is driven by growth projects? And if you can be also more specific on new volumes coming from biochemistry and circular economy? And the second question on disposal. Could you please provide more details on the progress of the eventual disposal of minority stake of new satellites like CCS as well as biogas? Thank you.
Francesco Gattei: Adriano, if you want to answer about the...
Adriano Alfani: Sure. Massimo, let's say, as I said before, that we don't give the split of the €2 billion in term of investment, how much it is for one compared to another one, but let me give some flavor about how we -- how it's going to change our portfolio, just to give you an idea, okay? So if you look historically in terms of traditional business, what you define traditional business or, let's say, the for-state business, we used to spend more than 50% of our CapEx on a yearly bases for traditional business, so let's say it for base chemical and for polymer -- commodity polymer, okay? And if you look in terms of projection in terms of portfolio shifting, what we are going to invest for in terms of percentage for base chemical and the standard polymer is in the range of 10%, while 90% of the future investment on a CapEx base will be for the new platforms, okay, of chemical platform. If you look in terms of the second part of your question, how much we are going to grow? Today, the portfolio of Versalis based on average 2023, 2024 is 30% on specialties, where this specialty include the compounding business, the biochemistry, circularity and so on. And the other 70% is base chemical and the standard polymer. After the transformation, so in five years from now, based on our transformation program, so restructuring program and developer of new platforms, we expect to go to 65% of the specialty business. And in this 65% is, of course, included the bio piece.
Francesco Gattei: Okay. About the disposal plan, clearly, you know we have already, let's say, announced that we are in a -- currently in a tendering activity. We've received interest from five, six potential investor for the CCS. This is a process that will require also sometime of fine-tuning, but clearly, there is an interest from different operators to join us in a portfolio that is, let's say, spreading from U.K., Italy, Netherlands, Norway and other countries, and that become -- will become one of the major lever for the decarbonation of hard-to-abate industries. We are continually working on the dual exposure model. So there is some assets that are under negotiation because, clearly, we are in a more advanced stage for that specific field. So clearly, we are referring to some of the last most relevant discoveries. And we are clearly also working on certain additional activity of valorizing again some stakes in planning and also potential in November, this could take more time. So as you've seen in the past months, we are a very active portfolio activity. And I think that we are able to deliver on a very fast way and in a very effective in term of value evaluation our plan of disposal. This is what I can tell you for the time being.
Massimo Bonisoli: Thank you.
Operator: The next question is from Lydia Rainforth, Barclays. Please go ahead.
Lydia Rainforth: Thank you, and good afternoon. Two questions, please. The first one, just coming back to the satellite plan. I think there was some talk in the first about the idea of carbon capture or the CCS side going into that satellite model. Can you just talk us through what you're seeing on CCS at the moment? And then secondly, on Azule, can you just remind us when the drilling in Namibia when we should actually think about that coming through as well? Thanks.
Francesco Gattei: On CCS, what is now evident this is after a number of years where there were some, let's say, skepticism about the potentiality of this industry that is quite traditional industries, nothing particularly new. What is new is substantially to link together emitters and storage potential. This is the chain that was never tested, but injecting CO2 in a reservoir is quite traditional and used activity. We see there is a huge interest. There is a huge interest because there are targets from a lot of industry to decarbonize their production line. And you have -- we have the storage potential. So we can deploy our expertise, our know-how. We can keep the cost of that activity as cheap as possible because we are using existing facilities. We are injecting in depleted reservoirs and not in aquifer. So the cost of energy related to that activity is lighter. And in the countries where there is a regulation framework already defined, there is a potential to take FID in a relatively short term. You've seen that the U.K. has allocated budget for this activity to support the players that will be involved, so the meters and on the other side, the injectors. And we are already testing or we are already, let's say, as we mentioned also during the presentation, completed the first part of our project in Ravenna with capture of more than 90%, or up to 96% as a peak of a stream of CO2 that is less than 3% in terms of concentration. So it's more difficult to capture. So it proves that this technology could be extremely effective in minimizing emissions, and therefore, this is a business with a great potential. We just to be, let's say, passionate in understanding that not only the players, but also the government have to be ready for having this business as an option in the table. The other question is about Azule, the Namibia, I think, Guido.
Guido Brusco: Thank you. On Namibia, the activity -- I mean we are planning to spud -- I mean, Azule is planning to spud two wells in the PEL 85 block, which is close to some of the largest discovery made in Namibia. We are quite optimistic on those wells. And the rig is planned to move by the end of the year. So, we'll likely spud the first well in December. Those wells are not so -- I mean, in terms of duration is month-and-a-half, two months maximum. So, we'll have first result of the first well by Q1, and the second well either late in Q1 or...
Francesco Gattei: Guido?
Guido Brusco: Yes.
Francesco Gattei: [indiscernible] probably, let's say, the line was interrupted. I think that you said late in Q1 or rarely Q2, I would suppose.
Guido Brusco: Yes. First well will be mid-Q1, the results, and the second well, we expect by late Q1 or early Q2.
Operator: The next question is from Henry Tarr, Berenberg. Please go ahead.
Henry Tarr: Hi there, and thanks for taking my questions. Two, if I may. One, just on CapEx the run rate clearly is sort of well below now the €9 billion that you indicated. I just wonder, has anything been deferred? Or how is -- how have you sort of shuffled out? Just how is this CapEx number moved? And then secondly, just coming back to the sort of bio-refining outlook, you're clearly sort of building new facilities, three new facilities now, I think. The market today is oversupplied. I mean, how confident sort of are you -- I know there's RED III, et cetera, but as you look out, when do you think this market comes back into balance? Because I guess we're already seeing some projects get canceled or delayed due to the current challenges. Thanks.
Francesco Gattei: Okay. On CapEx, there is no, let's say, delayed investment. It's just a matter of maturation of FID that comes at the end of the year. You mentioned that also the fact that clearly that we take FID in by refineries. We will have some FID also in upstream. Additional activity also sometimes in the exploration activity. So a lot of things that normally occurs in the last quarter. On the biorefining outlook, I'll leave back to Stefano Ballista.
Stefano Ballista: Yeah. Thank you for the question. You're absolutely right. The short term, the current scenario, as I said before, it's -- I would say, we have never seen this kind of level. But actually, on the other side, it's definitely clear that the medium scenario is well defined. Regulation are, as I said before, are in place. So there is no debate on that. The RED III is going to double current growth path. And it's not yet in place. It will get in place starting 2026, let me say. SAF is more than 1 million tonne -- refuel aviation on SAS going to be more than 1 million tonnes, and this is going to get in place following year. Another example, looking at current decision at country level, we got Germany that actually ban the UER has levered to comply with mandatory -- with blending mandates. And at the same time, they stop the carryover of certificate from 2024 to the following years. This is going to give, starting from next year, an upside of above 600,000 tonnes. Same reason we could do on U.S. The LCFS for California is expected end of this year, beginning of the following is going to do an increase from 20% to 30% in terms of GAG reduction with a step-up, current estimate, expectation actually is about 7% as a step-up starting from the following year. And then, we are starting to see a lot of tax credit support on staff. This year stuff, of course, in Europe is just a voluntary demand. In U.S., we are starting to see some demand driven also by, let me say, supporting incentives in terms of tax credit. I want to mention Washington where you're going to get a specific tax credit and stuff. And that's why we are seeing some demand over there. Given this kind of trajectory, we see 2030 above 50 million tonne of demand, and this is absolutely overtaking supply.
Henry Tarr: Thank you very much.
Operator: The next question is from Martijn Rats with Morgan Stanley. Please go ahead.
Francesco Gattei: Martijn? Probably, he's dropped the line.
Operator: Martijn Rats, your line is open.
Francesco Gattei: Let's move to the next one.
Operator: The next question is from Paul Redman, BNP Paribas (OTC:BNPQY). Please go ahead.
Paul Redman: Yeah, hi guys, and thank you very much for your time. Just a quick question on IPOs. You mentioned, I think, €2.5 billion of cash inflow next year from divestments possibly. Does that include a Plenitude IPO? And then, when we think about IPOs for Enilive, KKR seems to be paying a significantly higher multiple for Enilive than maybe where some of your listed peers trade. Why would that not mean that you just focus on increasing partner base? I think you've said before that I would like to hold, say, a 60% stake in the Enilive, so there's a lot more room to go for partner sales. And then just quickly following on Enilive question on voluntary demand for sustainable aviation fuel next year? What are you guys expecting?
Francesco Gattei: Thank you. On the IPOs, clearly, in that amount that I mentioned, that was mainly referring to the negotiations that are still ongoing and that will be -- we expect to close within the end of the year. So the €2.4 billion is substantially, let's say, a bunch of assets and do not include any IPO. IPO, it's difficult to be predicted. It's related to a lot of things, mainly on the financial stability and market condition. You know very well that in Europe this year still after 2022 and 2023 is a year of a very, let's say, limited number of IPOs. You are right that there is a very attractive multiple in the valuation that we received so far. In the -- in selling down our stake. The logic for us is to have a balance between expectation of an IPO in the mid and long term. And the in valorization upfront evaluation for it is high, but it's based also on the expectation of business that will double their EBITDA, planning to do within the four-year plan, Enilive just a bit longer, but substantially, this is the time period that could derisk an IPO, taking into account of the multiple that you are seeing in the market. So this is substantially what we believe, and we do not think that the solution towards an IPO is to have a continuous sell-down of a stake because at the end of the day, you are substantially doing an IPO to the end of someone else then -- and you do not control then when you will be able to do an IPO if you continue to reduce your stake, while we wanted to keep this decision in our hands. Yes. Thanks for the question. On the SAF demand, Stefano Ballista will answer, please.
Stefano Ballista: Yes, thanks for the question. On SAF demand, in Europe, next year, we expect above 1 million tonne. Comment, this is not voluntary demand. This is a mandatory demand. So there is no option, but to be compliant with that. So this is a given. We see voluntary demand in U.S. We expect doubling this year voluntary demand. It's voluntary, but as I said, linked to tax credit dedicated to SAF, and we expect about 1 million tonne twice as much current year. So overall, above 2 million tonnes.
Paul Redman: Thank you.
Francesco Gattei: Okay. We take the last question, please.
Operator: The last question is from Matt Lofting, JPMorgan. Please go ahead.
Matt Lofting: Thanks for taking the question. Two, please. First, I just wanted to come back on the distribution policy. Francesco, you talked earlier through the sort of the steps that Eni have taken through this year and ending up at sort of the €2 billion buyback, which is a very strong and welcome number. It just strikes me that in the end, the sort of the cash flow expectation for 2024 now is very similar to what you expected in March and yet the buyback is nearly double at €1.1 billion to €2 billion. So, could you perhaps just talk more conceptually about how we should think about that? Is 2024, to some degree, exceptional or specific in the context of the progress and the momentum around the strategy and deleveraging the balance sheet? Or when we think forward to 2025 and beyond, should we systematically expect that you begin the year by setting a sort of a floor in terms of the buyback, which inherently is in a more conservative level and then looking to grow it as you move through the year dependent on macro and dependent on performance? And then, the second quick question was Italy taxes, there's been various different reports of moving parts since the summer. And perhaps you could just update us on your understanding there. Thank you.
Francesco Gattei: Okay. On this -- the taxes, the windfall tax, clearly now is clear what is the announcement. So, I think that it's not involving clearly the energy system. It is involving different sectors. So, I think there is no other speculations around the potential taxes. About the buyback, you are referring, doubling substantial buyback is exactly the point that you were referring. At the beginning of the year, we are expecting to have a leverage between 20% to 25%, and we are doing much better. The number of disposal -- the amount of disposal that we are assuming this year are substantially including the one that we expect to -- let's say, to announce or to close in terms of negotiation in the coming quarter are much above our expectation. Completing almost 80%, 90% of your disposal plan in 12 months, clearly not cashing everything in 12 months, but having this activity substantially derisked entirely make a lot of difference in the perception of your distribution policy and your balance sheet strength. In the -- your question about this is a model that potentially could happen in the coming years, I believe in the logic of the buyback that we presented, the answer should be yes. What we said once we announced the buyback or the distribution policy, we substantially set a floor. So by definition, you will see an improvement. Clearly, it depends that there is an improvement during the year, but an improvement, I mean, pleasing improvement in the buyback if you are able to show that from the point of view of price scenario, execution of your strategy or portfolio, you see that the quarters comes better than what you expected in February or March once you started your yearly performance. This is, let's say, by definition of what is happening this year, also what happened in the, I think, one or two years ago, we did the same. I think this is completes the today's session. I believe that was quite dense, let's say, day with a lot of questions, and thank you all for the attendance. Our team of Investor Relations clearly is always available. Also during the weekend, Jon, said that he's completely free. So, we can, let's say, ask you to call him and his team for having all the data or information that we have not covered during this call. Thank you.
Operator: Ladies and gentleman, thank you for joining. The conference is now over. You may disconnect your telephones.
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