Eni Eyes New Plenitude Stake Sale to Boost Energy Transition

Eni SpA E, Italy's leading oil and gas company, is in discussions with several investment funds about selling a minority stake in its renewable and retail business, Plenitude, per a Reuters report. This potential sale would mark another step in Eni's ongoing strategy to attract specialized investors to support its energy transition efforts. Earlier this year, in March, Eni completed the sale of 7.6% of Plenitude to Energy Infrastructure Partners ("EIP").

The ongoing talks between Eni and the potential investors in its low-carbon unit centered around Plentitude's approximate value of more than €10 billion ($11.09 billion), the same for which EIP bought the shares of the unit early in 2024. Investors interested in acquiring a stake of around 10% in Plentitude include the U.S. asset management firm Apollo Capital Management, Norway's private equity fund HitecVision and London-based Trilantic Europe. However, both Eni and the investors involved have refused to comment publicly on these developments.

Plenitude is a key component of Eni's renewable energy efforts, generating power from renewables, providing electricity and gas services, and developing a network of charging stations for electric vehicles. The business unit is expected to attain earnings before interest, taxes, depreciation, and amortization (EBITDA) of €1 billion this year, up from €900 million in 2023.

This latest move aligns with Eni's "satellite strategy", where it creates separate units for renewable energy and biofuels, seeking investment partners to help grow these businesses. In July, Eni entered into exclusive talks with U.S. investment firm KKR over the sale of up to 25% of its biofuel business, Enilive.

This strategic approach is aimed at driving Eni's transformation toward a sustainable energy future.

E's Zacks Rank & Key Picks

E currently has a Zack Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked stocks like MPLX LP, Core Laboratories Inc. CLB and VAALCO Energy, Inc. While MPLX currently sports a Zacks Rank #1 (Strong Buy), Core Laboratories and VAALCO Energy carry a Zacks Rank #2 (Buy) each.

MPLX derives stable fee-based revenues from long-term contracts, with minimal exposure to commodity-price fluctuations. The partnership's robust capital expenditure forecast for 2024, along with significant expansion initiatives, underscores its commitment to sustainable growth.

The Zacks Consensus Estimate for MPLX's 2024 EPS is pegged at $4.29. The company has a Value Score of B. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

Core Laboratories, an oilfield services company, has a deep portfolio of sophisticated, proprietary products and services that positions it to take advantage of the growing maturity in the global hydrocarbon reserve base. CLB's expanding international upstream projects indicate a positive trajectory for revenues and profitability, especially as oil demand continues to rise globally.

The Zacks Consensus Estimate for CLB's 2024 EPS is pegged at $0.95. The company has a Value Score of B. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

VAALCO Energy is an independent energy company involved in upstream business operations, with a diversified presence in Africa and Canada. Having a large inventory of drilling locations in premium Canadian Acreage, the company's production outlook seems bright.

The Zacks Consensus Estimate for EGY's 2024 EPS is pegged at $0.65. The company has a Value Score of A. It has witnessed upward earnings estimate revisions for 2024 in the past 30 days.

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