Italy's Eni doubles share buyback as it bets on prolonged oil price rally

Italian energy group Eni (ENI.MI) has nearly doubled its share buyback program to €2.8 billion ($3.3 billion) and raised its 2026 cash flow guidance, citing expectations of a prolonged impact from the Iran war on oil and gas prices, Reuters reports.

The state-controlled company reported first-quarter adjusted net profit of €1.3 billion, down from €1.4 billion a year earlier, which had benefited from one-off gains, and below an analyst consensus forecast of €1.5 billion provided by the company.

Analysts attributed the shortfall to maintenance at refining sites and continued margin pressure in Eni’s chemicals business.

“Heavy planned maintenance in the downstream businesses sees Eni first quarter earnings below market expectations, albeit perhaps setting up for a better Q2,” said Citi analysts.

Earlier this month, Eni’s European peers said their trading divisions had generated billions of dollars from the energy supply crunch linked to the Iran war, partially offsetting disruptions to production.

Eni’s CEO has also said the group is considering an alliance with a commodity trader to develop its own trading arm.

The company revised upward its forecasts for Brent crude, gas prices, and refining margins in 2026, expecting continued strength in commodity markets.

Eni’s shares rose around 1.2% at 0940 GMT.

The expanded buyback programme was supported by an improved macroeconomic outlook and stronger expectations for underlying cash flow, now projected at €13.8 billion compared with €11.5 billion previously, the company said.

A potential additional boost could come from Eni’s majority-owned Vaar Energi (VAR.OL), which this week signalled the possibility of an extraordinary dividend if energy prices remain elevated.

Eni’s oil and gas production rose 9% in the quarter, driven by ramp-ups in West Africa, Norway, and start-ups in Angola, alongside stable operational performance, although partially offset by limited disruptions linked to the Middle East.

Exploration activities added around 1 billion barrels of oil equivalent in new resources, with discoveries in Angola, Ivory Coast, and Libya.

“Thanks to our high-quality and diversified asset portfolio ... E&P low breakeven prices and resilient financial structure, with gearing at historic lows, we are uniquely positioned to capture scenario improvements and to share expected upside with shareholders,” CEO Claudio Descalzi said.

However, the refining segment failed to fully benefit from higher product prices driven by disruptions linked to the effective closure of the Strait of Hormuz. Utilisation fell to 66% from 74% a year earlier, also affected by disruptions at Eni’s co-owned facility in the Gulf.

The refining division narrowed its losses but still posted a €47 million deficit, while the chemicals business also reduced its losses.

Net debt rose by €1.3 billion quarter-on-quarter to €10.8 billion at the end of March, with pro forma gearing at 15%, within the company’s target range of 10% to 15%.

By Vafa Guliyeva