* Sees operating cash flow of 47 bln euros by 2020
* To sell assets worth 5-7 bln euros to 2020
* Deal on Mozambique stake sale “not far”
* To cut capex by 8 pct vs previous plan
* Q4 adjusted net profit 459 million euros
* Shares up, outperform sector peers (Recasts lead with plan, adds CEO comments, shares, analyst)
By Stephen Jewkes and Ron Bousso
MILAN/LONDON, March 1 (Reuters) - Italy's Eni reported its first quarterly profit in 18 months and said it expects oil and gas production to rise 3 percent per year over the next four years after a string of high profile discoveries.
Eni, the biggest foreign oil major in Africa which accounts for more than 50 percent of its output, has made major gas finds in Mozambique and Egypt, and said on Wednesday it was looking to add up to 3 billion barrels of new resources out to 2020 even as it cut investments by 13 percent.
Earlier Eni beat expectations with fourth quarter adjusted net profit of 459 million euros ($484 million) helped by lower spending and higher oil prices.
"We've never had such a strong set of projects in our history," Chief Executive Claudio Descalzi said during a conference call with analysts on the group's 2017-2020 plan.
State-owned Eni said its organic reserve replacement ratio -- a measure of its ability to find hydrocarbons -- stood at 193 percent in 2016 compared to a 35 percent peer average.
Exxon Mobil Corp, the world's largest publicly traded oil producer, failed to replace 100 percent of its oil and gas reserves with new projects last year while ConocoPhillips Corp revised down proved reserves.
Eni, which will reap the benefit of a ramp-up at Kazakhstan's giant Kashagan field, expects output this year to jump by 5 percent as key projects in Angola, Ghana, Indonesia and Egypt come on stream ahead of schedule.
To deal with the gas finds, the company said it aimed to develop its liquefied natural gas (LNG) business.
"We can create a strong portfolio... the aim is to reach 10 million tonnes of LNG per year by 2025," Descalzi said.
Since taking over as CEO in 2014, Descalzi has refocused the group on the upstream (E&P) business of finding oil and gas.
The veteran oilman, previously head of Eni's E&P unit, has won plaudits from investors for steering Eni through the oil market slump by discovering prize acreage, cutting costs and selling assets.
But his mandate comes up for renewal in the coming weeks and there is some concern his position could be undermined by a corruption probe over a Nigerian oilfield.
"Upstream growth at Eni is well supported by significant organic resource access and while transformation is still in progress there's lots of value still to unlock," said Santander analyst Jason Kenney.
Eni said it would pay a dividend of 0.8 euros per share in 2017, the same as the previous year.
Under its so-called "dual exploration" strategy, Eni aims to sell down stakes in oil and gas fields it operates to raise cash to fund future development and support dividends.
The company, which will generate cash flow of 47 billion euros from operations over the next 4 years, said it was targeting asset sales of 5-7 billion euros to 2020.
"Around 60 percent of that will be in 2017-2018 and some 3-4 billion euros will come from diluting our stakes in fields we operate," CFO Massimo Mondazzi said.
Eni last year sold an overall stake of 40 percent in its giant Zohr field in Egypt to Rosneft and BP for around $2.1 billion.
Sources have said Exxon Mobil has clinched a deal to buy a stake in the group's Area 4 concession in Mozambique but that an announcement would not be made for some time.
Descalzi said a deal to sell a stake in the Mozambique field was "not far" away, adding Eni would remain operator of a part of the field.
At 1627 GMT Eni shares were up 2.8 percent, outperforming a 1.6 percent rise in Europe's oil index. ($1 = 0.9474 euros) (Reporting by Stephen Jewkes; editing by Jason Neely and Elaine Hardcastle)