Eni's Solid Upstream Overshadowed By Multiple Downstream Issues
- Eni is among the leaders in exploration (5yr IRR of 120%+) and also produces oil and gas at above-average margins and RoCEs.
- The positives of Eni's upstream operations are overshadowed by the political risk of its heavy exposure to Africa and the very underwhelming performance of its downstream operations.
- At 4x 2014 EBITDA, Eni would trade closer to $56 with a 5% dividend yield. Eni has to borrow today to support that dividend, but operational improvements could unlock upside.