Eni SpA E reported second-quarter 2018 adjusted earnings from continuing operations of 50 cents per American Depositary Receipt/ADR, missing the Zacks Consensus Estimate of 66 cents. However, the figure declined from adjusted earnings of 27 cents in the prior-year quarter.

Eni SpA Price, Consensus and EPS Surprise

Eni SpA Price, Consensus and EPS Surprise | Eni SpA Quote

Total revenues in the quarter rose 16% to €18,139 million ($21.6 billion) from €15,643 million ($17.2 billion) in the year-ago quarter.

Higher production along with increased oil and gas prices realizations boosted results in the second quarter of 2018. The upside was partially offset by mature field declines.

Operational Performance

Total liquids and gas production in the second quarter was 1,863 thousand barrels of oil equivalent per day (MBoe/d), up 5.2% year over year.

Liquids production was 881 thousand barrels per day (MBbl/d), up 6.5% from the year-ago quarter’s level of 827MBbl/d. However, natural gas production jumped 4.1% year over year to 5,359 million cubic feet per day (MMcf/d).    

Realized price of oil was $69.17 per barrel, up 52.7% from the year-ago quarter’s realized price of $45.29 per barrel. Realized natural gas price was $4.52 per thousand cubic feet (kcf), up 31.2% from $3.45 in the year-ago quarter.  

Gas sales were 18.08 billion cubic meters (Bcm), down 3% from 18.63Bcm in the year-ago quarter.

Financials

As of Jun 30, 2018, the company had long-term debt of €19 billion. The debt-to-capitalization ratio was 27.4%.   

In the reported quarter, net cash generated by operating activities from continuing operations amounted to €3 billion. Capital expenditures totaled €2 billion.

Outlook

Eni raised oil and natural gas production guidance for 2018 to 1.9 million (BOE/D) by 4% year over year. The growth is expected from ramp-up of fields in 2017, especially in Egypt, Kashagan field and Indonesia along with commissioning of new fields in Ghana and Angola. The new project in UAE will boost growth.

Gas sales are anticipated to decline due to fall in long-term contractual commitments. The company anticipates refining of break-even margin at about $3 per barrel by the end of 2018.

The company expects 2018 capital spending at €7.7 billion.

Q2 Price Performance

During the April-to-June period, Eni’s shares gained 5.1% compared with the industry’s 9.3% rise.


 

Zacks Rank & Key Picks

Eni currently carries a Zacks Rank #3 (Hold).

A few better-ranked players in the same sector are ConocoPhillips COP and China Petroleum and Chemical Corp. SNP, also known as Sinopec, and CVR Refining, LP CVRR. All these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ConocoPhillips, based in Houston, TX, is a major global exploration and production (E&P) company. It pulled off an average positive earnings surprise of 27.6% in the last four quarters.

Sinopec is one of the largest petroleum and petrochemical companies in Asia. The company delivered an average positive earnings surprise of 492.8% in the trailing four quarters.

Sugar Land, TX-based CVR Refining is an independent downstream energy partnership with refining and associated logistics properties in the Midcontinent United States. The company delivered an average positive earnings surprise of 52.8% in the last four quarters.

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