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Eni (E) Q3 Earnings Miss Estimates, Revenues Decline Y/Y

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Eni SpA (E - Free Report) reported third-quarter 2019 adjusted earnings from continuing operations of 33 cents per American Depository Receipt (ADR), lagging the Zacks Consensus Estimate of 52 cents and declining from the year-ago quarter’s 91 cents.

Total revenues in the quarter were €16,961 million, which declined 14.8% year over year.

The company witnessed weak quarterly results, thanks to lower average realized prices of liquids and natural gas, and a decline in petrochemical product sales. Since it reported earnings on Oct 25, there have not been any major changes in the share price movement.

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 three business segments — Exploration & Production, Gas & Power, and Refining & Marketing and Chemicals.

Exploration & Production

Total oil and gas production in the third quarter was 1,888 thousand barrels of oil equivalent per day, up 5% year over year. Ramped up production volume from new upstream developments in Egypt, Algeria and Mexico along with contributions from Zohr field aided oil equivalent volume.

Liquids’ production was 893 thousand barrels per day (MBbl/d), up 0.8% from the year-ago level of 886 MBbl/d. Moreover, natural gas production increased 7% year over year to 5,379 million cubic feet per day.

Average realized price of liquids was $56.90 per barrel, down 19% from $69.99 reported a year ago. Moreover, realized natural gas price was $4.49 per thousand cubic feet, down 22% from $5.73 a year ago.

Lower realizations of average liquids and natural gas prices hurt the company’s Exploration & Production segment. The segment reported a 31% year-over-year decline in adjusted operating profit to €2,141 million.

Gas & Power

Gas sales were 16.85 billion cubic meters, down 4% from the year-ago quarter. The decline was primarily caused by lower sales in Italy.

The company’s power sales in the third quarter were recorded at 10.18 terawatt-hours (TWh), up 8% from 9.46 TWh in the year-ago comparable quarter, owing to higher spot sales. This supported the Gas & Power segment to report 31% year-over-year rise in adjusted operating profit to €93 million.

Refining & Marketing and Chemicals

In the September-end quarter, total refinery throughputs were recorded at 6.26 million tonnes (mmtonnes), up 6% year over year. Eni’s wholesale sales in Europe increased 4% year over year to 2.83 mmtonnes. However, petrochemical product sales were down 10% year over year to 1.09 mmtonnes in the third quarter of 2019.

In the quarter, the segment contributed €145 million to adjusted operating profit of the company, reflecting a year-over-year improvement of 56%, owing to higher refinery throughputs.

Financials

As of Sep 30, Eni had long-term debt of €18,875 million, and cash and cash equivalents of €4,433 million. Its debt-to-capitalization ratio was 31.9%.

In the reported quarter, net cash generated by operating activities amounted to €2,055 million. Capital expenditure totaled €1,899 million.

Outlook

The company continues to expect production of 1.87-1.88 mmboe/d for 2019, assuming Brent crude price at $62 per barrel.

For 2019, the integrated energy player marginally lowered the prior projection of €8 billion of capital spending.

Zacks Rank & Stocks to Consider

Eni currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Murphy USA Inc (MUSA - Free Report) , CNX Resources Corporation (CNX - Free Report) and Contango Oil & Gas Company (MCF - Free Report) . While Murphy USA sports a Zacks Rank #1 (Strong Buy), CNX Resources and Contango Oil & Gas carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.          

Murphy USA beat the Zacks Consensus Estimate in three of the prior four quarters.

CNX Resources surpassed the Zacks Consensus Estimate in two of the prior four quarters, the average positive earnings surprise being 34.8%.

Contango Oil & Gas is likely to see bottom-line growth of 87% in 2019.

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