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Eni SpA (E - Free Report) has gained almost 4% in the past 12 trading sessions despite reporting weak-second quarter results on Jul 30. It seems that investors relied on the leading integrated energy company’s ability to withstand the coronavirus-led energy market downturn, leveraging on a strong balance sheet and low break-even prices of its upstream resources.
The companyreported second-quarter 2020 adjusted loss from continuing operations of 44 cents per American Depository Receipt (ADR), wider than the Zacks Consensus Estimate of a loss of 34 cents. In the year-ago quarter, the integrated energy player had reported earnings of 36 cents per share.
Total revenues in the quarter totaled $9,252 million, down from $21,161 million in the year-ago quarter.
The weak quarterly results can be blamed on lower production volumes and average realized prices of liquids and natural gas.
Operational Performance
The company operates through three business segments — Exploration & Production, Gas & Power, and Refining & Marketing and Chemicals.
Exploration & Production
Total oil and gas production in the second quarter was 1,713 thousand barrels of oil equivalent per day, down 6.6% year over year.
Liquids production was 853 thousand barrels per day (MBbl/d), down 1.6% from the year-ago level of 867 MBbl/d. Moreover, natural gas production dropped 10.8% year over year to 4,653 million cubic feet per day.
Average realized price of liquids was $24.24 per barrel, down 62% from $63.52 reported a year ago. Moreover, realized natural gas price was $3.40 per thousand cubic feet, down 31% from $4.90 a year ago.
Lower realizations of average liquids and natural gas prices along with a decline in hydrocarbon production volumes hurt the company’s Exploration & Production segment. The segment reported a loss of €807 million against a profit of €2,140 million in the June quarter of 2019.
Gas & Power
Gas sales were 13.92 billion cubic meters, down 22% from the year-ago quarter primarily because of lower sales in Europe owing to the coronavirus-induced lower demand.
The company’s power sales in the second quarter were recorded at 8.38 terawatt-hours (TWh), down from the year-ago quarter level by 9%. Notably, the Gas & Power segment reported a 407% year-over-year rise in adjusted operating profit to €218 million, thanks to contributions from the Gas & LNG Marketing and Power business.
Refining & Marketing and Chemicals
In the June quarter, total refinery throughputs were recorded at 5.34million tonnes (mmtonnes), down 5% year over year. Also, Eni’s wholesale sales in Europe fell 32% year over year to 1.75 mmtonnes. Moreover, petrochemical product sales declined 9% year over year to 1.02 mmtonnes in the second quarter of 2020.
In the quarter, the segment reported an adjusted profit of €73 million, up 43% year over year on higher throughputs in the rest of Europe (excluding Italy).
Financials
As of Jun 30, Eni had long-term debt of €22,746million, and cash and cash equivalents of €6,527 million. Its debt-to-capitalization was 41.4%.
In the reported quarter, net cash generated by operating activities amounted to €1,403 million. Capital expenditure totaled €978 million.
Outlook
Since the coronavirus pandemic is hurting the global energy demand, the company has revised its capital spending budget downward for 2020 by 35% from the initial guidance. For 2021, the energy major has also revised its capital spending downward by 30% from the initial projection. The company added that the capital budget reduction will be mostly focused on the upstream business.
Eni, however, expects its 2020 production flat with the earlier guidance at 1.71-1.76 MBoE/D. The pandemic also led the company to lower its full-year dividend projection to 55 euro cents a share from 89 euro cents estimated in February.
Concho is likely to see earnings growth of 21.6% in 2020.
Noble Energy has witnessed upward estimate revisions for its 2020 bottom line in the past 30 days.
EOG Resources’ 2020 bottom-line estimates have risen more than 200% over the past 30 days.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Eni (E) Gains 4% Despite Q2 Earnings Miss, Cuts Capex View
Eni SpA (E - Free Report) has gained almost 4% in the past 12 trading sessions despite reporting weak-second quarter results on Jul 30. It seems that investors relied on the leading integrated energy company’s ability to withstand the coronavirus-led energy market downturn, leveraging on a strong balance sheet and low break-even prices of its upstream resources.
The companyreported second-quarter 2020 adjusted loss from continuing operations of 44 cents per American Depository Receipt (ADR), wider than the Zacks Consensus Estimate of a loss of 34 cents. In the year-ago quarter, the integrated energy player had reported earnings of 36 cents per share.
Total revenues in the quarter totaled $9,252 million, down from $21,161 million in the year-ago quarter.
Eni SpA Price, Consensus and EPS Surprise
Eni SpA price-consensus-eps-surprise-chart | Eni SpA Quote
The weak quarterly results can be blamed on lower production volumes and average realized prices of liquids and natural gas.
Operational Performance
The company operates through three business segments — Exploration & Production, Gas & Power, and Refining & Marketing and Chemicals.
Exploration & Production
Total oil and gas production in the second quarter was 1,713 thousand barrels of oil equivalent per day, down 6.6% year over year.
Liquids production was 853 thousand barrels per day (MBbl/d), down 1.6% from the year-ago level of 867 MBbl/d. Moreover, natural gas production dropped 10.8% year over year to 4,653 million cubic feet per day.
Average realized price of liquids was $24.24 per barrel, down 62% from $63.52 reported a year ago. Moreover, realized natural gas price was $3.40 per thousand cubic feet, down 31% from $4.90 a year ago.
Lower realizations of average liquids and natural gas prices along with a decline in hydrocarbon production volumes hurt the company’s Exploration & Production segment. The segment reported a loss of €807 million against a profit of €2,140 million in the June quarter of 2019.
Gas & Power
Gas sales were 13.92 billion cubic meters, down 22% from the year-ago quarter primarily because of lower sales in Europe owing to the coronavirus-induced lower demand.
The company’s power sales in the second quarter were recorded at 8.38 terawatt-hours (TWh), down from the year-ago quarter level by 9%. Notably, the Gas & Power segment reported a 407% year-over-year rise in adjusted operating profit to €218 million, thanks to contributions from the Gas & LNG Marketing and Power business.
Refining & Marketing and Chemicals
In the June quarter, total refinery throughputs were recorded at 5.34million tonnes (mmtonnes), down 5% year over year. Also, Eni’s wholesale sales in Europe fell 32% year over year to 1.75 mmtonnes. Moreover, petrochemical product sales declined 9% year over year to 1.02 mmtonnes in the second quarter of 2020.
In the quarter, the segment reported an adjusted profit of €73 million, up 43% year over year on higher throughputs in the rest of Europe (excluding Italy).
Financials
As of Jun 30, Eni had long-term debt of €22,746million, and cash and cash equivalents of €6,527 million. Its debt-to-capitalization was 41.4%.
In the reported quarter, net cash generated by operating activities amounted to €1,403 million. Capital expenditure totaled €978 million.
Outlook
Since the coronavirus pandemic is hurting the global energy demand, the company has revised its capital spending budget downward for 2020 by 35% from the initial guidance. For 2021, the energy major has also revised its capital spending downward by 30% from the initial projection. The company added that the capital budget reduction will be mostly focused on the upstream business.
Eni, however, expects its 2020 production flat with the earlier guidance at 1.71-1.76 MBoE/D. The pandemic also led the company to lower its full-year dividend projection to 55 euro cents a share from 89 euro cents estimated in February.
Zacks Rank & Stocks to Consider
The company currently has a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include Concho Resources Inc. , Noble Energy Inc. and EOG Resources, Inc. (EOG - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Concho is likely to see earnings growth of 21.6% in 2020.
Noble Energy has witnessed upward estimate revisions for its 2020 bottom line in the past 30 days.
EOG Resources’ 2020 bottom-line estimates have risen more than 200% over the past 30 days.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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