ENI

ENI yesterday laid out a tiered windfall distribution framework. The plan is built on $70/bbl and anything above is surplus, redistributed across two price triggers.

Tier 1= Brent $70 to $90: 60% of incremental cash flow above plan goes to additional buybacks. At $90 that's an extra ~€1.5bn in repurchases (ENI effectively doubles its base buyback program).

Tier 2= Brent above $90: 100% of the surplus above $90 is paid out as an extraordinary cash dividend in Q4. Same ~€125m/dollar sensitivity, no declared cap. At $100 that's +€1.25bn on top of the ordinary dividend and base buyback.

Alternative triggers: The same extraordinary mechanism fires if TTF exceeds €54/MWh (+50% vs the €36 budget assumption) or if refining margins breach ~$8–9/bbl.

Our call: $89/bbl: At $89 we stay in Tier 1= no extraordinary dividend, but roughly €1.4bn in incremental buybacks (we estimated 1bn before rerating).

Read across: If ENI makes this move, expect the rest of the integrated majors to follow. The direction is clear: in a high price environment, the sector is willing to prefer distribution over investment. ENI is setting the template.

Upstream and integrated names look well positioned into year-end. Buy the sector.

We expect a good market reaction for ENI today.

ENI is among the best placed to benefit from the current war in Iran. They have no assets in the region and no tankers stuck in the strait of Hormouz. The main risk is that greedy governments decide to impose a tax to capture part of these extra profits.  Still, we would ride with the tide for the time being and stay long integrated oils and refiners.