Eni SpA’s (E) fourth quarter 2013 adjusted earnings from continuing operations of 98 cents per American Depository Receipt/ADR surpassed the Zacks Consensus Estimate of 73 cents. However, earnings decreased 10.1% from the year-earlier adjusted profit level of $1.09 per ADR.
Total revenue in the quarter fell 19.1% to €26,323 million ($35.9 billion) from the year-ago revenues of €32,523 million ($44.4 billion).
Operational Performance
Total liquids and gas production in the quarter was 1,577 thousand barrels of oil equivalent per day (MBoe/d), down 9.7% year over year, mainly attributable to political events in Libya and in Nigeria. The contribution of the startup of new fields and continuing production ramp-ups mainly in Algeria and Egypt partly offset the effects of planned facility downtimes and technical problems, in the North Sea and in the Gulf of Mexico respectively, as well as mature field declines.
Liquids production was 816 thousand barrels per day (MBbl/d), down 10.5% from the year-ago level of 912 MBbl/d. Natural gas production decreased 9.2% year over year to 4,177 million cubic feet per day (MMcf/d).
Gas sales were 25.56 billion cubic meters (Bcm), up 1.9% from the year-ago quarter, reflecting higher spot volumes.
In 2013, total oil and gas production was 1,619 MBoe/d, reflecting a decrease of 4.8% from the year-ago level of 1,701 MBoe/d.
Financials
As of Dec 31, 2013, the company had cash and cash equivalents of €5,288 million and long-term debt (including current portions) of €20,988 million. The debt-to-capitalization ratio was approximately 25%.
In the reported quarter, net cash generated by operating activities amounted to €3,181 million versus €2,107 million in the year-ago period. Capital expenditure for the fourth quarter of 2013 amounted to €3.77 billion, mainly related to the development of oil and gas reserves.
Company Outlook
Eni believes that a certain degree of ambiguity still looms with respect to the economic slowdown, particularly in the Euro zone, and volatile market conditions. This Italian giant expects the uncertainty to prevail in the European gas, refining and marketing and chemicals sectors. Overall demand will likely remain weak due to the ongoing economic dormancy and the appreciation of the Euro.
The company expects 2014 oil and natural gas production to be in line with 2013. This however excludes the impact of the divestment of Eni’s interest in the Russian gas assets of Artic Russia.
Worldwide gas sales are expected to fall from the 2013 level. The downside would come from both the large customers segment and in the retail segment considering an ongoing demand downturn and oversupplies, particularly in Italy.
For 2014, refining throughputs are expected to decline from the 2013 level due to capacity reductions. This would be partially offset by higher output at the new EST technology conversion plant at the Sannazzaro Refinery.
The company expects the full-year capital budget broadly in line with 2013. Eni had 12.75 billion euros in capital expenditure and 0.32 billion euros in financial investments in 2013.
Zacks Rank
Eni currently carries a Zacks Rank #3, which translates into a Hold rating. Meanwhile one can consider better-ranked energy sector stocks such as Athlon Energy Inc. (ATHL), Cabot Oil & Gas Corporation (COG) and Clayton Williams Energy, Inc. (CWEI). All these stocks currently sport a Zacks Rank #1 (Strong Buy).
Be the first to comment