Eni SpA (NYSE:E) Q2 2020 Earnings Conference Call - Final Transcript
Jul 30, 2020 • 03:00 am ET
Good morning, and welcome to the Eni's 2020 Strategy Update and First Half Results Conference Call and Q&A session hosted by Mr. Claudio Descalzi, Eni's CEO and top management. [Operator Instructions]
I am now handing you over to your host to begin today's conference call. Thank you.
Good morning, and welcome to Eni's strategy update and first half results. In February, we communicated a strategic road map towards 2050 that will take our company through the energy transition. In line with this strategy, in June, we announced the new organization, creating two new integrated business groups. Natural resources we'll develop the upstream oil and gas portfolio sustainably, promoting energy efficiency and carbon capture. The business group will be integrated along the gas value chain from exploration to development to wholesale via pipeline or LNG, leveraging our technical and commercial competencies.
In addition, this business will lead CCUS, Forestry, sustainability, environmental. Remediation, key activities for the sustainable delivery of the carbonized product. The second business group Energy Evolution is dedicated to supporting the evolution of the company's power generation, product transformation and marketing from fossil to bio, blue and green. Thanks to the business group's coordination, the company will be able to develop these activities in integrated way, both geographically and in terms of business lines. Maximizing results in terms of product development, customer service and profitability. Alongside corporate functions, the business growth will be supported by a new technology R&D and digital function. Our organization will deliver a better balanced portfolio, reducing the exposure to volatility of hydrocarbon prices to become a leader in the decarbonization process.
Turning to our long term strategy. This remains unchanged and our transformation is irreversible. The recent event related to COVID-19 pandemic, emphasized the need to accelerate along this path to deliver a more sustainable Eni. These draw the capital allocation for the four-year plan and we have delivered a significant reduction in our carbon footprint, where our target imply also that Eni will be scoped one, two, three net emission neutral in Europe by 2050.
Let's now turn to the action we have taken on capex enclosed for 2020, 2021. We reacted to the pandemic immediately. In just one month, we declared our first set of actions and have conducted a deep analysis to further cut our costs. In the mean time we have also reviewed our scenario assuming $40 per barrel Brent this year growing to $60 per barrel Brent in 2023. The result is that, today we are announcing our target, both for capex reduction and close optimization.
Overall in 2020 and 2021, we aim at an average capex cut of over 30% and EUR2.8 billion of overall close optimization of which 25% to 30% are structural. Together, this represent almost EUR eight billion of reductions compared to the original plan. In our group's capex plan, rigorous capital discipline is key. With the expectation of Brent at $40 per barrel in 2020, we will keep capex at just over EUR five billion.