Eni's (E) Earnings Surpass Estimates in Q1, Revenues Fall

Eni SpA E reported first-quarter 2018 adjusted earnings from continuing operations of 66 cents per American Depositary Receipt/ADR, beating the Zacks Consensus Estimate of 59 cents. The figure increased from the year-earlier quarter adjusted earnings of 45 cents.
 

Eni SpA Price, Consensus and EPS Surprise

 

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

Total revenues in the quarter fell 2.5% to €18,067 million ($22.2 billion) from €18,532 million ($19.7 billion) in the year-ago quarter.

Higher production along with increased oil and gas prices realizations boosted results for the first three months of 2018. This was partially offset by mature field declines.

Operational Performance

Total liquids and gas production in the first quarter was 1,867 thousand barrels of oil equivalent per day (MBoe/d), up 4% year over year.

Liquids production was 885 thousand barrels per day (MBbl/d), up 6.4% from the year-ago quarter’s level of 832 MBbl/d. However, natural gas production jumped 2% year over year to 5,358 million cubic feet per day (MMcf/d).    

Realized price of oil was $61.17 per barrel, up 25.7% from the year-ago quarter’s realized price of $48.65 per barrel. Realized natural gas price was $4.50 per thousand cubic feet (kcf), up 25% from $3.60 in the year-ago quarter.  

Gas sales were 22.44 billion cubic meters (Bcm), down 3.6% from 23.28 Bcm in the year-ago quarter.

Financials

As of Mar 31, 2018, the company had long-term debt of €19.9 billion. The debt-to-capitalization ratio was 29.2%.   

In the reported quarter, net cash generated by operating activities from continuing operations amounted to €2.2 billion. Capital expenditure totaled €2.6 billion.

Outlook

Eni raised its oil and natural gas production 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 further fuel growth.

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

The company expects full-year capital spending at €7.7 billion.

Q1 Price Performance

During the January-to-March period, Eni’s shares gained 6.4% against the industry’s 4.1% decline.

 

Zacks Rank & Key Picks

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

A few better-ranked players in the same sector are Nine Energy Service, Inc NINE, Baytex Energy Corp BTE and Solaris Oilfield Infrastructure, Inc. SOI. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nine Energy Service is engaged in delivering onshore completion and production services to unconventional oil and gas resource development. The company pulled off a positive earnings surprise of 6.25% in the preceding quarter.

Baytex Energy is a conventional oil and gas income trust focused on maintaining its production and asset base through internal property development and delivering consistent returns to its unitholders. The company delivered an average positive earnings surprise of 77.3% in the trailing three quarters.

Solaris Oilfield Infrastructure manufactures as well as provides patented mobile proppant management systems which unload, store and deliver proppant at oil and natural gas well sites. The company delivered a positive earnings surprise of 5.26% in the preceding quarters.

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