EniSpA’s E first-quarter 2015 adjusted earnings from continuing operations of 41 cents per American Depository Receipt/ADR (€0.18 per share) decreased from the year-earlier earnings of 90 cents per ADR (€0.33 per share). The decline was mainly due to weak gas sales.
Operational Performance
Total liquids and gas production in the quarter was 1,697 thousand barrels of oil equivalent per day (MBoe/d), up 7.2% year over year, mainly due to new start-ups during the quarter. Higher production in Libya as well as ongoing production ramp-ups at the fields in Angola, Congo, Egypt and the United States that were brought online in 2014, also contributed to the production growth.
Liquids production was 860 thousand barrels per day (MBbl/d), up 4.6% from the year-ago level of 822MBbl/d. Natural gas production increased 9.9% year over year to 4,596 million cubic feet per day (MMcf/d).
Gas sales were 25.62 billion cubic meters (Bcm), down 4.3% from the year-ago quarter, reflecting a fall in consumption due to the economic downturn and oversupplies.
Financials
As of Mar 31, 2014, the company had cash and cash equivalents of €6.7 billion and long-term debt (including current portions) of €22.7 billion. The debt-to-capitalization ratio was approximately 27.1%.
In the reported quarter, net cash generated by operating activities from continuing operations amounted to €2.3 billion. Capital expenditure totaled €2.9 billion (up 14.2% year over year).
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 oil giant expects the uncertainty to prevail in the European gas, refining and marketing and chemicals sectors. Overall global economic growth is likely to strengthen in 2015 due to the depreciation of the Euro.
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 as well as expectation of higher yields in Libya.
The company expects 2015 oil prices to be lower compared with the 2014 level. Worldwide gas sales are expected to fall from the 2014 level. The downside would come from both the large customers and retail segments, considering an ongoing demand downturn and oversupplies, particularly in Italy.
For 2015, refining throughputs are expected to increase from the 2014 level due to lower planned 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 from 2014 levels.
Zacks Rank
Eni currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the oil and gas industry include Suncor Energy Inc. SU, CNOOC Ltd CEO and Hallador Energy Company HNRG. All these sport a Zacks Rank #1 (Strong Buy).
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