Eni Upgrades Dividend Despite Drop In Fourth-Quarter Profit

By Liam Moloney

Italian oil and gas company Eni SpA (E) Friday said it plans to increase its 2012 dividend by almost 4%, despite a similar-sized drop in fourth-quarter profit, pulled lower by higher taxes and weaker natural gas sales.

"The company will achieve industry-leading upstream growth rates," in 2013, said Chief Executive Paolo Scaroni in a statement, with production rising thanks to the start up of big projects like the Kashagan oil field in Kazakhstan and the Angola liquefied natural gas project.

Eni is in the process of increasing its exposure to oil and gas production, boosting investments using funds from the sale of its stakes in Italian gas grid operator Snam SpA (SRG.MI) and Portuguese energy company Galp Energia SGPS SA (GALP.LB).

Eni also said Monday it is rethinking its 43% stake in Saipem SpA (SPM.MI), following an Italian investigation into allegations that the oil services company paid bribes to obtain Algerian contracts. That stake is worth about 4 billion euros ($5.36 billion) at current market prices.

The company proposed Friday paying a dividend of EUR1.08 a share on 2012 earnings. Of that, EUR0.54 has already been distributed as an interim dividend.

Eni's fourth-quarter net profit, adjusted for changes in the value of oil inventories and one-off gains and losses from asset sales, dropped 3.6% to EUR1.52 billion from EUR1.58 billion a year earlier. This was almost in line with an average forecast of EUR1.55 billion in a Dow Jones Newswires poll of 12 analysts.

Net revenue from operations rose 10% to EUR32.57 billion.

Eni's oil and gas output for the period averaged 1.747 million barrels of oil equivalent a day, as expected, compared with the 1.678 million barrels of oil equivalent a day in the fourth quarter of 2011. Eni's oil and gas production was crimped last year by the conflict in Libya that toppled Col. Moammar Gadhafi's regime.

Eni shares closed Thursday at EUR17.32, giving it a market value of EUR62.94 billion--making it Italy's biggest company

Write to Liam Moloney at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires