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Eni (E) Explores Oil and Gas Spin-offs for Green Investments

Zacks Equity Research
·3-min read

Eni SpA E, a leading Italian energy company, is pioneering a unique strategy that involves spinning off stakes in promising oil and gas projects to fuel their development while redirecting focus and capital toward low-carbon initiatives, per a Reuters report. This innovative approach, spearheaded by CEO Claudio Descalzi, marks a significant shift in the company's trajectory toward a more sustainable future.

Eni's strategy revolves around the concept of creating separate entities, or satellites, to attract investment specifically tailored to either traditional fossil fuel ventures or burgeoning low-carbon enterprises. By doing so, the company aims to unlock additional funding sources while addressing the dual challenge of meeting current energy demands and advancing toward greener solutions.

Chief financial officer Francesco Gattei emphasized the importance of the satellite model in balancing the requirements of both conventional and sustainable energy markets.

Recent endeavors by Eni include the establishment of Plenitude, a retail and renewable unit, and Enilive, a biofuel division. These units, integrated with dedicated management teams and independent balance sheets, are slated for listing to further fuel their growth and development.

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Eni's strategy stands out among its peers in the oil and gas industry, as it seeks to demonstrate the potential of early-stage businesses in renewables while optimizing returns from conventional operations. The company has already initiated spin-offs of fossil fuel operations, such as the recent merger of its British North Sea assets with Ithaca Energy.

Looking ahead, Eni is eyeing potential spin-offs in key regions like Indonesia and Ivory Coast. In Indonesia, plans are underway to establish a gas hub following significant discoveries, while in Ivory Coast, the company has made substantial offshore oil and gas finds.

At its recent market update, Eni outlined ambitious financial targets, aiming to raise substantial capital through listings or stake sales in its low-carbon satellites and traditional exploration and production units. This forward-looking approach reflects Eni's commitment to driving both financial growth and environmental sustainability.

Zacks Rank & Other Key Picks

E currently has a Zack Rank #2 (Buy).

Investors interested in the energy sector may look at some other top-ranked stocks like SM Energy Company SM, Hess Corporation HES and Matador Resources Company MTDR. While SM Energy sports a Zacks Rank #1 (Strong Buy), Hess and Matador Resources carry a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

SM Energy is set to expand its oil-centered operations in the coming years with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments can create long-term value for shareholders.

The Zacks Consensus Estimate for SM’s 2024 earnings per share (EPS) is pegged at $6.53. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.

Hess operates primarily in two areas — the Bakken shale and the Stabroek project offshore Guyana. It is currently in the process of being acquired by supermajor Chevron in an all-stock deal worth $53 billion. HES currently has a Growth Score of B.

The Zacks Consensus Estimate for 2024 and 2025 EPS is pegged at $9.17 and $11.15, respectively. The company has witnessed upward earnings estimate revisions for 2025 in the past seven days.

Matador Resources’ upstream operations are primarily concentrated in the Delaware Basin, which is among the United States' most prolific oil and gas regions. The company has demonstrated a consistent upward trend in total production since 2019.

The Zacks Consensus Estimate for MTDR’s 2024 EPS is pegged at $7.67. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.

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Hess Corporation (HES) : Free Stock Analysis Report

Eni SpA (E) : Free Stock Analysis Report

SM Energy Company (SM) : Free Stock Analysis Report

Matador Resources Company (MTDR) : Free Stock Analysis Report

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Zacks Investment Research