Good afternoon, ladies and gentlemen, and welcome to Eni’s 2025 First Quarter Results Conference Call, hosted by Mr. Francesco Gattei, Chief Transition and Financial Officer. For the duration of the call, you will be in listen-only mode. I am now handing you over to your hosts to begin today's conference. Thank you.

Thank you. Good afternoon. Our February Capital Market Update emphasized the speed and scale at which we have been progressing our strategy. Quarter one maintained that pace and recent events have confirmed why our clarity of strategic view and speed of action is so critical. We are creating value, leveraging our competitive strengths in the upstream, strengthening and diversifying the company, fixing underperforming activities, materially strengthening our balance sheet all while offering a competitive and resilient return to investors. Reviewing the important strategic highlights of the quarter and year-to-date. Growth is an important feature in our plan. In the Upstream, in March, Johan Castberg began production and will add 66,000 barrels per day of oil production at plateau for Var, as it targets over 400,000 barrels per day by the fourth quarter. Castberg is the first of the five major start-ups due this year with Balder X in Norway, Agogo and NGC in Angola plus Congo LNG Phase 2 to follow, setting us up for a strong 2026. In the Transition businesses, Plenitude has completed the construction of its 200 megawatt battery in Texas and acquired 245 megawatts in share of photovoltaic and storage in California. While Enilive began production of SAF at its new 400,000 ton per year facility at Gela in Sicily. We are also realizing significant value through the investment of aligned capital into our Transition Businesses and the valorization of our industry-leading exploration activities, via the Dual Model. We closed the agreed increase in EIP’s stake in Plenitude to 10% with an additional cash of €209 million at the end of March. We also closed the increase in KKR’s stake in Enilive to 30% with an additional cash of €601 million in April. This followed the €2.97 billion we collected at the beginning of March. Furthermore, we have received non-binding offers for additional stakes in Plenitude that could take aligned investment to 25% to 30%. We consider around a 70% majority Eni stake in both our major Transition businesses as broadly the right level for the time being. In the Upstream, also in March, we announced a major dual exploration valorization with the agreement to sell stakes in Baleine in Cote D'Ivoire and Congo LNG in the Republic of Congo to Vitol for a cash in of around $2.7 billion expected to complete later this year. Our satellite model is an important feature of our business and in the Upstream in February we announced an MOU with Petronas to combine assets, with a mixed component of growth and value, in Indonesia and Malaysia. This is a really significant development for Eni, creating a new and highly material regional satellite in an important part of the world with a strong partner and with the added opportunity of some cash valorization alongside. We expect to move to a definitive agreement around the middle of this year, with the completion before the end of 2025. Structural responses in some of our legacy activities are also required as the energy evolves. The transformation of Versalis over the next four to five years is a major positive source of self-help, amounting to more than €1 billion per year EBIT improvement by 2030. We have positive news to report here as well with agreement reached with the institutions and the unions on the details of our Plan. We closed Brindisi, the first of the remaining two steam crackers at the end of March, and Priolo will be shut down before the end of this year. Our strategy is designed to create a stronger, more profitable and more resilient company. Our first quarter results demonstrate this: net income of €1.4 billion is up around 60% quarter-on-quarter in a very similar scenario setting. Upstream production was in line with our expectation as 2024 divestments impacts work through, seasonal factors play out, and we await the positive impact of the start-ups that will contribute to our full year expectation of around 1.7 million barrels per day average. At the segment level: E&P Pro Forma EBIT of €3.3 billion almost offsetting lower crude and production year-on-year helped by lower expenses and efficiency gains and the benefit of portfolio grading. GGP results reflect the normal seasonal strength and were essentially in line with last year. Enilive and Plenitude reported Pro Forma results consistent with our full year expectations once respective seasonality is taken into account. Enilive was impacted by the deterioration in biofuel margins year-on-year and also lower biorefinery utilization albeit biorefining EBITDA remains positive. This was partially offset by positive evolution of our marketing operations. Plenitude recorded a 3% EBITDA improvement year-over-year supported by strong retail results and rising renewable generation. In our Transformation activities both Refining and Chemicals were loss making. Refining results reflect the weaker margin year-on-year and lower throughputs after the closure of Livorno plus the extended turnaround at Sannazzaro in the quarter. Our continued losses in Chemicals reflect the challenging scenario in Europe that we consider to be a structural feature and confirm our actions to restructure and transform this business. Cash flows before working capital of €3.4 billion in the quarter were consistent with our full year guidance of €13 billion at $75 per barrel. The cash tax rate was around 30%, in line with normal levels, and dividends received were in line with associates net income. CAPEX in the quarter was €1.9 billion, a little below the run-rate of €9 billion in the February guidance. Valorization and divestment proceeds net of acquisitions in the quarter totaled €3 billion and included cash in for our Transition satellites. We repurchased €386 million of shares in this quarter completing our €2 billion 2024 program. We expect to begin the 2025 €1.5 billion buyback program after shareholder approval in May. Balance sheet leverage was 18%, 4% lower than the last quarter despite a weaker dollar adding 1 percentage point, while our Pro Forma leverage, incorporating agreed transactions still to close, stood at 12%, an improvement of 3 percentage points from the end of 2024 and the minimum in our history. Volatility and cyclicality is a recurring feature of this industry; every two to three years we are impacted by an external event, so it is really normal course of business. Our company needs to be prepared, as it should be to leverage the cyclical upswings. Given the current scenario it is worth reviewing our balance sheet in a little more detail. In the past five quarters, we have announced over €9 billion in tail asset divestments, dual exploration valorization, and aligned external investment into our Transition-oriented businesses. We have executed faster and for greater value than we and certainly the market expected, moving quickly to lower our leverage. An additional element of protection is provided by our satellites. The model not only enables us to raise capital and self-finance our growth while highlighting the valuation multiples related to transition business or specific upstream geographies such as Norway, but it also strengthens our resilience during downturn phases. On one hand, we are able to contain our leverage through targeted business valorization. On the other, the availability of autonomous entities, capable of containing price downturns with their own balance sheets allows us to secure more stable cash flows via dividends, and hence we are less affected by market volatility. Our consolidated balance sheet is just about the strongest in our history. At the end of the quarter, we had over €28 billion in financial assets and undrawn committed lines and we have lengthened maturities by more than two years over the past two years. We estimated our net cost of net debt in 2025 will be below 1.5%. This position will enable us to continue to balance pursuing our strategy, remaining resilient and flexible, and deliver our returns to shareholders. When we discussed our Plan and Four-Year strategy we emphasized the value in the consistency in our approach. We also confirmed our dividend at €1.05 and a share buyback totaling €1.5 billion itself a minimum floor, that we are committed to maintaining even under adverse market scenarios. And we need to be nimble and responsive to the changed conditions. The work we have done on the balance sheet helps us significantly, but there are also further measures we will now begin to take to reinforce our financial position without compromising our medium/long-term objectives of our investment proposition. We have identified over €2 billion of initial actions to enhance our free cash flow positions and lowering our cash neutrality by around $15 per barrel, including additional portfolio upside, selective CAPEX rescheduling over the coming months, active working capital management aimed at enhancing cash recovery, and structural cost optimization initiatives. Together these actions further enhance our financial position and de-risk shareholder distribution. In summary, the additional financial trends we have introduced into Eni over the past year, the intrinsic resilience of the model we have built and the additional options and levers we have available mean we can maintain underlying strategy and also confirm the full distribution policy we have announced. With the current scenario headwinds, we are focused on delivering our underlying performance and leveraging our portfolio optionality to offset cash flow impacts and deliver our distribution commitments. We therefore can confirm our full year production outlook of 1.7 million barrels per day. We also confirm our profitability guidance for GGP, Enilive, and Plenitude. At our lowered scenario assumption, we expect to generate €11 billion of cash flow from operations, a little better underlying than our sensitivities imply. We expect to offset this impact with the cash mitigation measures I described, including net CAPEX to below €6 billion. Therefore, we can also confirm leverage between 0.15-0.2 in 2025, within the 0.1-0.2 plan range. We are very satisfied with our progress in 2025 year-to-date both on the strategic and financial side. The macro scenario has deteriorated and is volatile and uncertain, but the actions we are taking and flexibility we have mean we are in a position to resist its full impact. We can therefore advance our strategy and deliver on our shareholder commitments. With that, I conclude my remarks and welcome any questions you may have.

Thank you, Francesco. We will now open to questions. Francesco is joined by any top management, and we will attempt to get around to answer all the questions you may have. As a courtesy to everybody who participates, can we keep it to two questions and then hopefully we can get through everybody in the time allocated. We are going to start with the first question. It comes from Alejandro Vigil at Santander. Alejandro.

Thank you, Jon, and thank you, Francesco, for taking my questions and congratulations for the bid in this first quarter. The two questions I have are about the guidance of production, the 1.7 billion barrels per day. Your thoughts about the discussions about Kazakhstan OPEC plus quotas and if you think there is some risk coming from this situation? And the second question is about Enilive and the outlook for margins. Thank you for the spread that you have added to the release. I think it is very useful. But I am very interested in the outlook for the margin evolution in the coming quarters in Enilive? Thank you.

I leave the floor to Guido Brusco for the first answer and Stefano Ballista for the one related to Enilive.

As far as concerned the production outlook, as you know, we have anticipated also by Francesco, we have five significant startups, two in Angola, two in Norway, and one in Congo. So our production will grow over time to hit the guidance we gave. For Kazakhstan, so far, neither the operator of the asset nor the shareholder and the contracting company have been engaged by the authority for any production cuts.

Thank you for the question. And talking about biofuel view, first of all, this is a year of oversupply. This is something well known. Rough number is about 2 million oversupply, demand versus supply. In the first quarter, we saw a demand, expected growth demand, and we will deep dive a little bit, not coming yet. And the reason is that actually players have the whole year to satisfy some obligation. The second reason, actually there are some uncertainties in the U.S. that we expect to be clearly defined moving forward. On demand, it's worth to highlight that the sustainable aviation fuel 2% target for the EU, pretty much in this first half didn't come through. It is expected for the second half, and the reason pretty much are twofold. The chance to get to satisfy the demand in the whole year, and the second, logistic facility to be in place. About the U.S., it's relevant to highlight that the low carbon fuel standard target of an increased GAG reduction to 30%. At the beginning of the year, expected 1st of April, has been delayed due to a technical request from the Office of Administrative Law of California. And now it is expected, well, until some weeks ago was beginning of September. Now it's expected beginning of July, given CARBO already gave a review of these technical aspects. So overall, we see a path of margin increasing, thanks to this rebalancing pathway we are viewing. I have to say clearly, it's very relevant that we focus on value, not on volume. This is a clear strategic approach in an oversupply market. This is what we are doing. We are definitely focused on value, even reducing in some cases volume. The more the system will move in that direction, the better the improvement trajectory we are seeing and foreseeing.

Thank you.

Thanks, Alejandro. The next question is from Biraj Borkhataria at RBC. Biraj?

Hi, thanks for taking my questions. Francesco, you touched on obviously the strength of the balance sheet and the progress you've made there, which is obviously now looking in good shape. I was wondering, we've obviously seen the environment deteriorate a little bit more. You've touched on some of the smaller changes you've made to your kind of capital program. But I guess the question is, what will you need to see price-wise or signal-wise to adjust your activities more materially there? And then just to follow up on Stefano on sustainable aviation fuel, in late March there was a joint statement from your customers, the airlines, arguing about concerns on availability and then the cost of SaaS and suggesting these mandates were not realistic or achievable. So I just wanted your thoughts on whether it's – is it reasonable or realistic to assume that these mandates could be relaxed this year, or do you expect policymakers to hold firm there? Thank you.

Yes. About the CAPEX and the reaction to the price signals. Clearly, we think that at the end of the day, once there is a deterioration of the scenario, you have the opportunity substantially to use different levers that you, let’s say, prioritize in terms of effectiveness, in term also on impacts in future trends of the company and the target that the company has given. For this reason, we have you have seen that we have announced that this €2 billion of improvement in cash that is for around one half or around one half is related to CAPEX and cost improvement. So shifting certain investment, postponing or extending the execution of certain activity, efficiency, there is also a natural trend related to a lower market scenario that will imply a lower cost in executing the activity. And the remaining part is related split half and half between a portfolio improvement and the working capital effectiveness or a new action in terms of valorization of working capital or stocks and managing this activity. This gives us more flexibility for a worsening of the scenario in case it will be necessary. I would say that there is no special or strict rules as to what the price that will imply a change in our CAPEX profile. Clearly, if there is a further deterioration of the scenario, we will continue to apply even more low levers, including the one that you were referring to CAPEX, but also other activities that we can expedite that will contribute to cash even in a lower scenario. So I don’t have a specific answer. What I can say is that there is flexibility in our plan even to adjust to lower prices. Then I leave to Stefano.

Yes. Thank you, Francesco. And thanks for the question, actually. Short answer is no. We actually don’t think there is any chance to let’s say not having in place this target. This is a mandatory target 2% within the end of the year. And actually, if you don’t fulfill it, there are going to be carryover of the target next year and a penalty as well. Let me add just a couple of comments on the topic as a whole. Actually, SAF capacity, it’s in place in Europe. And not only Europe, actually, we have also some capacity in the U.S. and in China as well. In Europe, just to make an example, we got Gela with up to 400,000 tons per year and we just start up production at the beginning of this year. So the current mandate of 2% that equals about 1 million to 1.2 million as capacity to be definitely fulfilled. So this is the first comment. Second comment, the target is on fuel suppliers, actually not on airlines. And even the matter of logistics, actually it’s not there because for a transition period you can fulfill the mandate in a single airport. You don’t need to be physically blending a biojet in each airport. This gives a lot of flexibility in having it done. And then let me say as the last comment, probably in terms of target, I would have a little bit different perspective. Now we got 2% in place up to 2030 and then 6%. So it’s three times just from one year to another. In order to have, let’s say, a proper development of the investments, actually would be a proper approach to get to sort of step up along the way. In that way, you can, let’s say, have a balanced approach between supply and demand. So there is, I mean, space to work together with airlines to couple with the energy transition and the GAG reduction targets in an effective and efficient way.

Okay. Thank you very much.

Thanks, Biraj. The next questions come from Josh Stone at UBS. Josh, are you on the line?

Hi, Jon, and good afternoon. I have two questions, please. One, I wanted to come back and talk about asset sales. Maybe just talk about how confident you are in closing your sale to Vitol and maybe just characterize the market for selling assets. You talked about some nonbinding offers for Plenitude. Are there still live discussions happening there, and how are you thinking about that? Is it better to sell now or maybe wait for higher values? Maybe if you could just talk about Plenitude and your thinking on that? And then the second question on Namibia. There was some news last week that you hit hydrocarbons at your latest well. I think that’s about two from two. So maybe you can just talk about the next steps and what you can share so far, what you’ve learned from your campaign there? Thank you.

Thank you. The first very fast. Clearly, asset sales, we are extremely confident, first of all, because we have already cashed in an additional €600 million in early April and 11th of April that is the amount that is related to the top-up of the 5% on the Enilive and KKR deal. And then we are working on this planning for potential transaction 15% to 20%. The nonbinding offers are there. There is, I would say, a strong competition pressure. I don't see any, let's say, loss of valuation under the current market also because this is clearly a deal that has a long-term perspective and also eventually will be helped by a reduction or expectation of lower interest rates in the future. On the deal in Africa, West Africa, we recall where all the documents are already signed and we are just waiting for the various approvals that are required for this activity. There is no market provision that will impede to proceed. So I would say that almost 90%, 95% of our plan is already in our hand or with a very positive perception of this execution. In terms of Namibia, I leave now to Guido to provide all the updates.

Your question was well-timed, as we just released a press statement confirming our successful discovery in Namibia. The well effectively reached the target, and the reservoir is exhibiting favorable petrophysical properties, with no water contact. We conducted an extensive acquisition campaign, including world line loggings, hydrocarbon samples, and sidewall cores. Additionally, we performed a well test and achieved a flow rate exceeding 11,000 barrels of oil per day, limited by surface constraints. The oil is light with minimal associated gas and very low iron gas. This is very promising and intriguing. More evaluations and analyses will follow. The well will be temporarily plugged and abandoned, and the rig will be released, after which we will assess the full site together with the Operator and other partners to understand the extent of the discovery.

Thanks Guido. Thanks Josh. Good timing on that question. So we're now going to move on to Giacomo Romeo at Jefferies. Giacomo, are you there?

Yes, thank you. I appreciate the additional disclosures in this quarter's reports; they are greatly appreciated. I have two questions. First, regarding the buyback, you reconfirmed the €1.5 billion buyback under the lower macro scenario today. This effectively extends your CFFO payout at the upper end of your new policy range. What happens if the macro environment worsens further? Are you comfortable going beyond the 40% payout? My second question is about the memorandum of understanding you signed with YPF on LNG in Argentina. Can you discuss the appeal of Argentina as a potential LNG exporter? Will you consider integrating upstream and seeking assets there, or are you satisfied with just your share in the project?

Yes. Thank you. I will reply to the first question and then I leave back to Guido for the Argentinian questions. About the buyback, clearly, you know that once we set our distribution policy and the amount starting level for the buyback, we said that in a way that will be a floor. And therefore, we are going to execute this, clearly, we give the reference in terms of percentage of cash flow distribution, but we have all the levers to keep this distribution policy and buyback affordable in our balance sheet because there are a lot of other tools that are not just a percentage of cash flow from operation, but also the capabilities we are seeing in this maneuver to balance this distribution also with free cash flow improvement in terms of portfolio, in terms of working capital. And clearly, the leverage level is another factor that has to be considered whilst you have to manage the fluctuation of the price. So I think there is no issue at all on confirming this €1.5 billion even in a lower scenario. Clearly, eventually, you could accelerate or slow down a bit the pace of buyback, but this is part of the normal activity that we are able to execute within the almost one year of the buyback plan. I leave now to Guido for the YPF deal.

Yes. The Vaca Muerta Basin, as you know, is the second largest shale gas field in the world, and the Argentina LNG project is an integrated project from the upstream up to the midstream and the export of the LNG. This has the objective to hit more than 30 million tons per annum by the early 2030. It has different phases, three phases, which will be run in parallel. Eni and YPF have signed an MOU to execute one of these three phases, which would reach a total of 12 million tons per annum. We are joining YPF, who has very strong and deep country knowledge on the unconventional upstream of Vaca Muerta. They are operating this asset for decades. So they know pretty well the subsurface and all development and operation activities. While on our side, as Eni, we are recognized as a fast track and low-cost project operator. We are looking at this Argentina LNG project and full value chain to complement our portfolio of LNG and also to reach our strategic target of 20 million tons per annum. And we think that the combination of the expertise of YPF on the upstream of Vaca Muerta and the expertise of Eni on the midstream floating LNG will set this venture for success.

Thanks Guido. Thanks Giacomo. We're going to move now to Matt Smith of Bank of America. Matt, are you there?

Hi guys, good afternoon. Thanks for taking my questions. First, I wanted to come back to the sort of CAPEX cuts that you sort of laid out today, and you've sort of listed optimization and postponements of projects as one of the sort of sources of the reduction in CAPEX. I just wanted to understand sort of which projects we are specifically referring to and guess my broader question was, if the current commodity price certainly was to extend into next year, would any of these projects not be postponed, but actually be canceled? So that would be the first question. And then the second one, I wanted to come back to Namibia, if I could, not in the information that you put out on the latest well today. I mean, given you have had additional time in the lab with the first discovery, I just wondered if you could compare or contrast, is it the correct read that the second discovery has better characteristics than the first or what additional color could you give us there, please? Thank you.

On the CAPEX, on the capital optimization, there is no major project that we can point out specifically. It is a broader activity, some exploration activities, some production optimization activity related to the recharging, activity-related eventually to the rebranding of our service stations. So it is a spread around the activity with marginal impact on a specific project. So you shouldn't expect any delay on the key and most important projects. About Namibia if Guido wanted to answer.

About Namibia, it is too premature to make. As I said, I mean, when I spoke about it just a few minutes ago, we need to assess the full size of the discovery. It's really premature. We just finished the well testing. We are still in a phase where we have to do some work. And I would also recommend to refer to the operators to get more insights and information on the discovery itself.

Thank you. Thanks Matt. We're going to move now to Alessandro Pozzi. Alessandro?

Thank you for taking my questions. I have two. First, regarding the €2 billion cost-saving initiatives, part of which relates to capital expenditures, I would like more details on any significant initiatives related to working capital and other expenses. Secondly, about Argentina, could you share your planned level of investments over the next few years? Are you considering investments in upstream, and what production levels do you anticipate from the country when Phase 1 goes online? Thank you.

About the cash initiative I mentioned earlier, more than €1 billion is related to CAPEX and cost improvement. CAPEX primarily reflects postponed activities that could be executed over a longer timeframe. We anticipate a natural reduction in costs associated with a lower performance scenario. We also expect benefits from portfolio activities, with approximately €500 million linked to portfolio improvements that result in less cash outflow and greater value from potential cash inflows. Additionally, the revenue aspect pertains to cash initiatives focused on managing working capital. That's about the extent we can share with you. Would you like to discuss Argentina, Guido?

Yes, I mean Argentina is an integrated project. So basically, we will be all along the value chain from the upstream to midstream balanced ideally. So having the same equity in both sides. The project, of course, is in a very early stage, but Phase 3, the phase that we are assessing with YPF of 12 million tons per annum will have cost in the region of $20 billion. Of course, I'm including all costs from upstream to the transportation to the midstream and the liquefaction.

And is that included in your full year CAPEX guidance or is it on top?

We are speaking about an MOU that is still to be clearly designed and defined with a lot of activity that had to be fine-tuned later on. So it's not yet included.

Alright, thank you. Thanks Alessandro. We're now going to move to Peter Low at Redburn. Peter?

Hi, thanks. The first question was just on the tax rate in the quarter, a bit lower than we expected. Can you perhaps just outline what was driving that and then maybe what we should expect for the rest of the year, will it return to that 50% to 55% range? And then the second question was just on production in the quarter, particularly gas. There's quite a large sequential step down. I think you called out disposals at the release, so those were oil weighted. So I just wanted to check, was there anything like maintenance or turnaround kind of impacting that gas number in the quarter? Thanks.

Yes. Regarding the tax rate, it was positively influenced by the results structure this quarter. The contribution from GGP related to power planning helped lower the tax rate, especially due to higher oil and gas prices. This quarter reflects a favorable mix of contributors that generally suggests a tax rate in line with our expectations. For the year, considering lowered oil prices, we anticipate the tax rate might increase towards the higher end of the 55% estimate. While this quarter has contributed positively, we foresee an increase in the upcoming months due to the planning for lower oil prices and a diminished impact from businesses with lower tax rates. I'll now turn it over to discuss gas.

For gas production in general, when comparing the fourth quarter to the first quarter, the decrease is mainly due to lower entitlement in some countries where we produce gas, certain PSA effects in Libya, Indonesia, and Algeria, as well as some M&A impacts in the U.S.

Thank you. Thank you, Peter. I'm now going to move to Irene Himona at Bernstein. Irene?

Yes, thank you. Good afternoon. First, a quick question on cash flow from your announced recent disposals. How much would you expect to close and book in the second quarter, please? And then secondly, on E&P. Your underlying per barrel EBIT margin has improved sequentially quite a lot, given it was a similar oil price environment. You have indicated that around half of your planned disposals in the full year plan is from upstream. So my question is, can we anticipate that as you continue high-grading the portfolio, that unit margin improvement can continue further and of course, it is structural, so presumably also your oil price sensitivity may change over time? Thank you.

On the disposal side, on this quarter, second quarter, we have already cashed in €600 million that are related to the KKR deal. We are potentially expecting the closing of the West African deal, but that could slip also to the third quarter, taking into account the different authorities that have to be involved and therefore, is something that could despite during the summer, let's say. And we do expect clearly that we are able to proceed to the next step for the Plenitude deal. So this is not clearly a cash in date but will be in this quarter, potentially conclusion of the tender activity that we are executing.

Yes. I mean, the improvement of the EBIT per barrel and cash flow per barrel, as we anticipated also in our capital market update, is structural as we are high-grading our portfolio, developing high-value barrels and disposing of lower-value barrels. So it's a structural phenomenon, which over time should continue, of course.

Thanks, Irene, for your questions. We're going to move to Henry Tarr at Berenberg. Henry, are you there? Okay. Henry, if you can reconnect and we can come around to your question, but we'll move now to Paul Redman at BNP, Paul?

Hi Jon and thanks very much for your time. Two quick questions from me. First one is on the cash flow mitigation chart. And a bunch of buckets here. I just wanted to work out if any of these are structural reductions or whether these are one-off impacts that we could see a reverse impact in 2026? And secondly, just to look at the refining business as the second sequential loss for that business. Just trying to work out your outlook for the year for that business. Do we expect any change in margins, any changes in utilization rates as we go through 2025? Thank you very much.

On the cash initiative, these are clearly structural because except for the few delays that we mentioned that are spread around between executing certain activity, branding Enilive stations or EV charge or certain special activity, all the rest are related to factoring, working capital management. That means substantially it is something that is not absorbed during the year. And the cost reduction that, as we said also is related to the improvement and also the scenario that we are facing that clearly has a lower cost of energy overall. So I think this clearly indicates structural changes to start improvement, including the portfolio variation that we mentioned in terms of higher valorization or higher stakes. The refinery I think that, Adriano or yes, please.

Yes. Thanks, Francesco. Regarding the refining losses in the first quarter, this is primarily due to a decline in the term margin. Additionally, we experienced maintenance at the Taranto refinery during this quarter, which affected our SEC. We anticipate increasing refinery utilization starting in the second quarter. While we expect margins to be slightly improved compared to today, they will not be as strong as they were last year.

Thanks, Pino. We're going to now move and thank you, everybody, for respecting the two questions we're getting through this nice and quickly. So we're going to move to Massimo Bonisoli at Equita. Massimo?

Good afternoon. Thank you. And two clarification questions for me. The first one, the €2 billion mitigating initiatives. Could you give us a broad time frame for the savings to be realized and the eventual one-off cost associated with the savings? The second question on the outlook for GGP, you mentioned the upside of over €1 billion. Can you shed some light on the market conditions needed to improve the guidance and to renegotiate the contract versus current conditions? Thank you.

First of all, the €2 billion is a free cash flow impact. It means that it's executed within the year and completed within the year. So there are actions that are, let's say, captured immediately. So the postponement of activity in line with the execution of that activity, the possibility to have certain savings that we mentioned about the lower scenario, the portfolio improvement, etcetera, is something that are already generating the results. Clearly, it requires also the time for executing the project. You have to consider that the economic benefit is higher than the cash flow benefit because clearly, the economic cut will be or the improvement is something that has a higher value, but that clearly is captured within the 12 months that are ending within December. On the gas scenario and the gas.

So talking about the upside case for GGP, you pointed out two elements, which are actually the ones that we also are pursuing. One is the renegotiation of our supply and sales contracts. This is, as you know, a normal feature of the business. We have a few discussions ongoing and I would say that probably the summer will be the period in which we might see some of those completing. And so I mean, depending on the outcome of those discussions, this could have some value unlock. In terms of market condition, we are fairly, let's say, defended from the downside risk of flat price. We have some upside linked to clearly flat price increase instead. And the other elements that actually we like in terms of producing more value is spreads and volatility. So low geographical spreads, all half spreads, summer winter spreads. Those are part of the volatility that if those happen, we will be able to capture.

Thanks Massimo. We go with the last two, so we're going to move first to Kim Fustier at HSBC. Kim?

Hi, good afternoon and thanks for taking my questions. I had two, please. First on Venezuela, could you comment on any impact on your operations and your ability to lift crude cargoes and the revocation of export licenses and secondary tariffs on the country? And then lastly, just a quick housekeeping question. You've cashed about €3 billion in the first quarter from the sale of annualize to KKR, but we can't actually see the disposal proceeds in the cash flow statement. So if you could point to where we should look at that would be helpful? Thank you.

On Venezuela, Guido?

Yes. In Venezuela, we primarily focus on gas production. We produce gas for domestic use and to supply the gas-fired power plant for civil consumption. Historically, we have received payments in kind. Currently, we are in discussions with U.S. authorities to establish compliant payment methods in line with the new regulations. We are optimistic that by the end of the year, we will be able to meet our commitments to the population while adhering to U.S. sanctions.

And Kim, I'll come back to you on the cash flow statement and the structure. The cash is in there, but it's not straightforward. So I can do that for you, but we'll do that off-line, if that's okay. We can move now to the last question, which is Lydia Rainforth at Barclays. Lydia?

Thank you, Jon. Good afternoon. Two final questions, if I could. The first one, these are as big picture, but given where the balance sheet is, and it's much stronger than it was even a year ago, but in previous downturns, it does give you a more privileged position into how you respond to volatility than in the past. So I'm just actually asking you to reflect on that. Does having that strength of the balance sheet impact how you think about how you respond and is there opportunities that it opens up? And then secondly, I hear everything you say about the cash management, the mitigation measures that you're putting in place. And hopefully, when you start the buyback, it actually helps the relative share price performance even further. But given where the share price is, do you ever start thinking about we can lean into the balance sheet a bit more and buy back even more shares, just given where the share price actually is? Thanks.

In terms of our leverage, we are likely the only company in our peer group that is set to reduce its leverage in the current or upcoming quarters. This is due to our strategic execution, which anticipates potential downturns and provides structural robustness. This positions us well to manage market volatility, which can swing dramatically with daily drops and rebounds. Understanding market fundamentals versus market psychology has become increasingly challenging. Our strong balance sheet allows us to strategically choose actions that won't disrupt our overall strategy, giving us the flexibility to explore various opportunities and maintain reserves for tougher times that may arise. This period presents a unique opportunity for us to act effectively while staying alert to market developments, rather than relying solely on optimistic expectations. Regarding buybacks, we will proceed with our previously presented policy during the next annual general meeting. We will begin buying back shares as conditions permit, but I cannot predict the execution pace, as it depends on market circumstances. Buying back at lower prices is a logical approach, and I believe we've covered everything. Jon, do you have anything to add?

We have Francesco. That's all the questions done. Thank you, everybody, for attending the call. Thank you for your questions. Thank you for the speed and directness we got through that. I think they worked very well. So wishing you a happy end of the week. Good luck for next week and speak to you soon. Thanks a lot. Bye.