Eni boosts payout after profit doubles, shares near 20-year highs

By Francesca Landini

MILAN, Oct 23 (Reuters) - Italian energy group Eni said it would pay a €1.3 billion special dividend and increase its share buyback programme after its third-quarter net profit more than doubled from a year ago, propelling its shares to a near 20-year high.

The state-controlled company's adjusted net profit for the July-September period was €2.8 billion, above a company-compiled analyst consensus of €2.5 billion and sharply up from €1.3 billion a year earlier.

Eni also raised its guidance for underlying cash flow from operations to €16.5 billion from €15 billion.

"We are further raising the distribution by an extraordinary dividend of €0.46 per share to be paid in the fourth quarter and increasing again the buyback to €3.8 bln, underscoring our continued commitment to sharing upside with shareholders," CEO Claudio Descalzi said in a statement.

Shares in the group rose 4% by 0858 GMT to €27.15, just shy of a session peak which set a high since 2007 and bucking a negative Milan blue-chip index, according to LSEG data.

"Eni reported a strong set of results... driven by stronger results in the refining segment versus consensus and our expectations, as well as a lower effective tax rate," RBC analyst Biraj Borkhataria said in a report.

Eni rivals including BP and TotalEnergies are also expected to post a big jump in third-quarter profit, with refining and trading earnings boosted by the US-Israeli war on Iran which has pushed energy prices to multi-year highs.

Investors are focused on how firms will use the extra cash.

The Italian group continued to show higher-than-expected growth in production. Eni has discovered 1.23 billion barrels of new hydrocarbon resources so far this year, well above its target.

Underlying hydrocarbon production rose 7% year-on-year to 1.83 million barrel of oil equivalent per day (boe/d) in the third quarter.

This was driven by project ramp-ups in West-Africa, Mexico and Norway and a contribution from Searah, a joint venture launched with Malaysia's Petronas.

Eni now expects production to increase by between 6% and 7% this year as it advances with upstream projects in southeast Asia, Latin America and Africa, it said.

The refining business posted a €730 million pro-forma operating profit, up sharply year-on-year thanks to improved plant utilization rates despite higher shipping costs, Eni said.

As for the low-carbon businesses, Eni's biofuel unit Enilive reported an 80% year-on-year increase in its pro-forma adjusted operating profit.

(Reporting by Francesca Landini, additional reporting Mirko Miorelli editing by Giulia Segreti, Gavin Jones and Valentina Za)