MILAN, March 19 (Reuters) - Italian energy group Eni said on Thursday it was raising the top end of its distribution range for the next five years and would pay an extraordinary dividend if oil prices exceed its forecast.
The state-controlled company pledged to distribute 100% of additional cash flow in the form of an extraordinary dividend if annual average Brent prices exceed $90 per barrel or gas prices or refining margins rise by 50% compared with Eni's current expectations.
The conflict in Iran has triggered a more-than-40% rise in Brent to above $100 per barrel, and without a resumption of oil and liquefied natural gas traffic through the Strait of Hormuz analysts see no significant easing of energy prices.
In its updated strategy, the company said it would increase its target distribution payment to 35-45% of cash flow from operations (CFFO) in 2026-2030, from a previous 35-40%.
This will translate this year into a 5% increase of its dividend and a share buyback of 1.5 billion euros.
"Eni will be significantly more cash generative by 2030," said Chief Executive Claudio Descalzi in presenting the strategy.
He said the group would see growth in its main activities and "continued cost reduction and performance improvements across our other businesses."
CFFO is expected to reach around 17 billion euros by 2030, the energy group said.
In a separate statement, Eni said it was deconsolidating its retail and renewable energy unit Plenitude through a shareholding reorganisation and a new governance structure.
The transaction involves a non-proportional capital increase to be subscribed to by shareholders amounting to around 1.5 billion euros ($1.72 billion).
Of this total at least 1 billion euros is expected to be provided by asset manager Ares, which is already an investor in the unit.
Following the capital increase, Eni will have a equity stake of close to 65% in Plenitude.
($1 = 0.8709 euros)
Reporting by Francesca Landini, editing by Gavin Jones
Source: Reuters