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Eni (E) Gains 2% as Q2 Earnings Beat Estimates, Finds New Oil

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Eni SpA (E - Free Report) gained almost 2% since it reported strong second-quarter results on Jul 30. The outperformance was aided by higher realizations of average liquids and natural gas prices. Increased refinery throughputs also drove the company’s bottom line.

The leading integrated energy company reported second-quarter 2021 adjusted earnings from continuing operations of 58 cents per American Depository Receipt (ADR), beating the Zacks Consensus Estimate of 42 cents. The bottom line turned around from the year-ago loss of 44 cents per ADR.

Total revenues in the quarter totaled $19,631 million, up from $9,252 million a year ago.

Eni SpA Price, Consensus and EPS Surprise

 

Eni SpA Price, Consensus and EPS Surprise

Eni SpA price-consensus-eps-surprise-chart | Eni SpA Quote

Operational Performance

The company operates through four business segments — Exploration & Production, Global Gas & LNG Portfolio, Refining & Marketing and Chemicals and EGL, Power & Renewables.

Exploration & Production

Total oil and gas production for the second quarter was 1,597 thousand barrels of oil equivalent per day, down 7.6% year over year.

Liquids production was 779 thousand barrels per day (MBbl/d), down 9% from the year-ago level of 853 MBbl/d. Natural gas production dropped 6.7% year over year to 4,339 million cubic feet per day.

Average realized price of liquids was $63.76 per barrel, up 163% from $24.24 reported a year ago. Realized natural gas price was $4.95 per thousand cubic feet, up 46% from $3.40 a year ago.

Higher realizations of average liquids and natural gas prices aided the company’s Exploration & Production segment. The segment reported a profit of €1,841 million, turning around from a loss of €807 million recorded in the June quarter of 2020.

Global Gas & LNG Portfolio

Eni’s worldwide sales of natural gas for the June quarter were recorded at 16.95 billion cubic meters (bcm), up 22% year over year.

The integrated energy major’s Global Gas & LNG Portfolio business segment reported adjusted operating profit of €24 million, deteriorating from the year-ago profit of €130 million. Narrowing spread between Italian reference spot gas price and the continental reference spot gas price hurt the segment.

Refining & Marketing and Chemicals

For the June quarter, total refinery throughputs were recorded at 6.75 million tonnes (mmtonnes), up 26% year over year. Petrochemical product sales improved 12% year over year to 1.14 mmtonnes for the second quarter of 2021. 

For the quarter under review, the segment reported an adjusted profit of €190 million, improving from a profit of €73 million in the year-ago quarter owing to higher refinery throughputs.

EGL, Power & Renewables

Retail gas sales — managed by Eni gas e luce (EGL) — increased 23% year over year to 1.08 bcm owing to reducing negative impact of the coronavirus pandemic. Notably, EGL is an energy retail company that is controlled entirely by Eni.

Power sales in the open market improved 17% year over year owing to increased economic activities, thanks to easing social-distancing measures.

Overall, from EGL, Power and Renewables, the company reported a profit of €108 million, reflecting a 27% year-over-year improvement.

Financials

As of Jun 30, Eni had long-term debt of €21,090 million and cash and cash equivalents of €9,713 million. Its debt to capitalization was 39.7%.

For the reported quarter, net cash generated by operating activities amounted to €2,717 million. Capital expenditure totaled €1,268 million.

Oil Discovery

In a separate release on Aug 2, a new discovery was announced by the company in Block 10 of the Cuenca Salina Sureste Basin, located off the coast of Mexico. The new oil find is expected to have 150 to 200 MBoE in place, per the company’s preliminary estimates.

Outlook

The company reaffirmed its hydrocarbon production target for 2021 at 1.7 million BoE/D. For the September quarter, the energy giant projects hydrocarbon production at 1.68 million BoE/D. The company projects organic capital expenditure for this year at €6 billion.

Zacks Rank & Other Stocks to Consider

The company currently sports a Zacks Rank #1 (Strong Buy). Other prospective players in the energy space include Whiting Petroleum Corporation (WLL - Free Report) , Continental Resources, Inc. (CLR - Free Report) and PDC Energy, Inc. (PDCE - Free Report) . All the stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Whiting Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days.

Continental is expected to witness earnings growth of 256% in 2021.

PDC Energy is likely to see earnings growth of 111.8% in 2021.