MILAN, Oct 25 (Reuters) - Italian energy group Eni

will increase its share buyback programme to 2 billion

euros ($2.2 billion), it said on Friday, after beating

third-quarter profit expectations.

The state-controlled group had indicated in July that it

could raise the 1.6-billion-euro programme to up 2.1 billion if

the macroeconomic situation improved.

It reported an adjusted net profit of 1.27 billion euros,

topping the 1.08 billion expected by analysts in a poll compiled

by the company but down from 1.82 billion last year.

Despite lower oil price expectations, Eni said on Friday

that it would increase rewards for investors as progress on its

disposal plan and cost controls help keep its debt in check.

Analysts have warned that a drop in oil prices after more

than two years of bumper profits could push big energy companies

to borrow to maintain shareholder payouts or force them to cut

buybacks.

Eni announced on Thursday that U.S. fund KKR would

buy a 25% stake in its biofuel business Enilive for 2.9 billion

euros, continuing efforts to spin off growth businesses to fund

its energy transition.

With Eni expecting the Brent crude oil price to drop to an

average of $83 a barrel this year, down from a previous estimate

of $86, the company trimmed its full-year guidance for

underlying cashflow from operations and operating profit.

Third-quarter underlying cashflow from operations (CFFO) at

2.9 billion euros was in line with consensus.

The group's leverage ratio, which measures total debt in

relation to equity, was stable compared with the second quarter

at 22% and is now expected to fall towards the lower end of a

15%-20% range.

Its four-year disposal plan is proceeding faster than

expected with excellent visibility for almost all the 8 billion

euros in net proceeds planned, Eni said in a statement.

"Overall, Eni continues to deliver on its strategic

objectives, and the nudge up in distributions is likely to be

welcomed by investors," Royal Bank of Canada analyst Biraj

Borkhataria wrote in a note for clients.

($1 = 0.9238 euros)