Eni (E) Q2 Earnings Miss on Lower Hydrocarbon Production

Eni SpA E reported second-quarter 2019 adjusted earnings from continuing operations of 36 cents per American Depository Receipt/ADR, lagging the Zacks Consensus Estimate of 65 cents and deteriorating from the year-ago quarter’s 50 cents. Lower hydrocarbon production attributed to the underperformance.

Total revenues in the quarter were €18,823 million, almost flat year over year.

Operational Performance

Total oil and gas production in the second quarter was 1,825 thousand barrels of oil equivalent per day, down 2% year over year. Termination of the production contract for the Intisar gas field in Libya primarily led to the downside.

Liquids production was 867 thousand barrels per day (MBbl/d), down almost 2% from the year-ago level of 881 MBbl/d. Moreover, natural gas production fell 2.4% year over year to 5,230 million cubic feet per day.

Realized price of liquids was $63.52 per barrel, down 8% from the year-ago $69.17. However, realized natural gas price was $4.90 per thousand cubic feet, up 8% from $4.52 a year ago.

Gas sales were 17.80 billion cubic meters, down 2% from the year-ago quarter. The decline was caused by lower sales in Italy and the rest of Europe.

Financials

As of Jun 30, the company had long-term debt of almost €19 billion. Its debt-to-capitalization ratio was 35.9%.

In the reported quarter, net cash generated by operating activities amounted to €4.5 billion. Capital expenditure totaled roughly €2 billion.

Outlook

The company continues to expect production growth of hydrocarbon through 2019 in the band of 2% to 2.5%. For 2019, the integrated energy player projects capital budget below the prior projection of €8 billion owing to operational efficiencies.

Zacks Rank & Stocks to Consider

Eni currently carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy space include World Fuel Services Corporation INT, MPLX LP MPLX and Oasis Midstream Partners LP OMP. While World Fuel sports a Zacks Rank #1 (Strong Buy), MPLX and Oasis carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

World Fuel beat the Zacks Consensus Estimate in each of the prior four quarters, the average positive earnings surprise being 16.4%.

MPLX is likely to see earnings growth of 23.6% through 2019.

Oasis Midstream has an average positive earnings surprise of 0.3% for the past four quarters.

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