Investing.com -- Eni (BIT:ENI) announced it will increase its annual share buyback program to 2 billion euros, far above its original plan for the year, after the Italian energy firm posted better-than-anticipated third-quarter earnings.
The state-backed company had previously said it could raise its repurchases to up to 2.1 billion euros from 1.6 billion euros depending on an improvement in economic conditions.
A decrease in oil price expectations -- coming after over two years of outsized profits -- had led some analysts to predict large energy firms would either maintain or reduce the size of its buybacks.
However, Eni said "strategic progress" on its disposal plan and cost reductions to control its debt pile had persuaded the business to lift the amount it aims to return to stakeholders. On Thursday, Eni revealed that US fund KKR would purchase a 25% interest in its biofuel business, in a sign that the group is pushing to offload assets to bankroll its energy transition.
For the third quarter ended on Sept. 30, adjusted net profit of 1.27 billion euros beat company-compiled analysts' estimates of 1.08 billion euros. But the figure slipped from 1.82 billion euros in the year-ago period.
A projected decline in the average price of Brent crude to $83 a barrel this year -- down from Eni's earlier expectations of $86 a barrel -- also underpinned the firm's decision to slash its full-year guidance for underlying cashflow from operations and operating profit. Oil prices have been under pressure in recent months as concerns over sluggish growth in top importer China have counterbalanced worries over potential supply constraints stemming from ongoing tensions in the Middle East.
"Overall, Eni continues to deliver on its strategic objectives [...], and the nudge up in distributions is likely to be welcomed by investors," analysts at RBC Capital Markets said in a note to clients.
Milan-listed shares in Eni were higher in morning trading on Friday.