By Eric Sylvers
LONDON-- Eni SpA said Friday it would reduce spending, slash its
dividend, suspend its buyback plan and sell EUR8 billion ($8.5
billion) of assets over the next four years as the Italian oil and
gas company hunkers down to face a prolonged period of lower oil
prices.
The four-year plan for the years 2015-2018 projects a 17% fall
in capital expenditure compared with a previous plan. Eni said it
would pay a cash dividend on this year's earnings of EUR0.80 a
share, a 29% reduction from 2014. The company left open the
possibility of following rivals, including Royal Dutch Shell PLC,
and paying dividends beyond this year in shares.
Eni and other oil companies large and small are grappling with
the rapid decline in oil prices over the past nine months that has
forced them to find creative solutions to cut costs while
maintaining dividends and exploration activities that will
guarantee future growth. While the price of oil has rebounded from
lows reached in January, the International Energy Agency, an energy
watchdog, Friday said in its monthly report that the price could
soon begin to fall again.
In its four-year plan, Eni is forecasting Brent crude oil, the
global benchmark, will average $55 a barrel this year, rising to
$70 in 2016, $80 in 2017 and $90 in 2018. Friday Brent traded at
about $56 a barrel.
About half of the value of the asset sales will come as Eni
offloads stakes in recently developed projects such as a massive
gas find in Mozambique that has already been partially sold off.
Eni still owns 50% of the Mozambique field after having sold a 20%
stake two years ago for $4 billion. The company has traditionally
been successful in finding new oil and gas fields and often early
on in the life of the assets has sold stakes to share development
costs.
"Ultimately we are building a much more robust Eni that can face
a period of lower oil prices," Chief Executive Claudio Descalzi
said while presenting the company's new four-year plan.
Mr. Descalzi said the dividend will increase in future years "in
line with our growth." Eni has traditionally had one of the highest
dividend payouts in the industry. Half of this year's dividend will
be paid in September with the rest in the beginning of 2016, said
Massimo Mondazzi, Eni's chief financial officer.
"The decision to re-base the dividend in 2015 is appropriate and
in line with our strategic objectives considering the new oil price
scenario," Mr. Descalzi said.
Eni also said it had suspended its buyback program, which had
already slowed to a standstill in recent months, with an eventual
relaunch to be evaluated when market conditions improve.
The new capital expenditure plan calls for EUR48 billion in
spending through 2018. Half of that spending hasn't been finalized
and can be adjusted up or down depending on industry developments,
Mr. Descalzi said.
Of the asset sales, 70% is expected to be carried out in the
first two years of the plan.
Eni's shares fell 4.8% to EUR15.54.
Write to Eric Sylvers at eric.sylvers@wsj.com
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