Yahoo Finance Eni (E) Q2 Earnings Rise on Higher Production and Gas Sales - Analyst Blog
EniSpA’s E second-quarter 2015 adjusted earnings from continuing operations of 9 cents per American Depository Receipt/ADR (€0.04 per share) decreased from the year-earlier earnings of 66 cents per ADR (€0.24 per share). The bottom-line growth was mainly due to high production and gas sales.
Operational Performance
Total liquids and gas production in the second quarter was 1,754 thousand barrels of oil equivalent per day (MBoe/d), up 10.7% year over year, mainly due to new start-ups during the quarter. Higher production in Libya, along with ongoing production ramp ups at the fields in Angola, Congo, Egypt and the United States (that were brought online in 2014), contributed to the production growth as well.
Liquids production was 903 thousand barrels per day (MBbl/d), up 11.1% from the year-ago level of 813 MBbl/d. Natural gas production increased 10.4% year over year to 4,676 million cubic feet per day (MMcf/d).
Gas sales were 22.39 billion cubic meters (Bcm), up 17.3% from the year-ago quarter on increased sales and higher volumes marketed.
Financials
As of Jun 30, 2015, the company had long-term debt (including current portions) of €27.5 billion. The debt-to-capitalization ratio was 26%.
In the reported quarter, net cash generated by operating activities from continuing operations amounted to €3.4 billion. Capital expenditure totaled €3.34 billion.
Outlook
Eni believes that a certain degree of ambiguity still looms with respect to the economic slowdown that has affected the Euro zone in particular, and volatile market conditions. This Italian oil giant expects the uncertainty to prevail in the European gas, refining and marketing, and chemicals sectors. Overall global economic growth, however, is likely to strengthen in 2015, spearheaded by the U.S.
The company expects 2015 oil and natural gas production to increase from the 2014 level. This is mainly due to new field start-ups and ramp up of fields commissioned in 2014. The company is also optimistic about higher yields from Libya.
The company expects 2015 oil prices to be lower than the 2014 level. The downside would come from both the large customers and retail segments, considering an ongoing demand downturn and commodity oversupplies, particularly in Italy. Nonetheless, worldwide gas sales are expected to remain stable.
For 2015, refining throughputs are expected to increase from the 2014 level due to favorable trading environment, lower downtime as well as higher output at the new EST technology conversion plant at the Sannazzaro Refinery.
The company expects full-year capital spending to be lower than the 2014 levels.
Zacks Rank
Eni currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are Linn Energy, LLC LINE, Holly Energy Partners L.P. HEP and Valero Energy Partners, L.P. VLP. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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