Eni (E) Shares Dip 1.1% Despite Reporting Q2 Earnings Beat
Eni SpA E shares have declined 1.1% since it reported better-than-expected second-quarter 2023 earnings on Jul 28. The downward price movement can be attributed to the company’s declining year-over-year revenues. This is an indicator of the company’s operating weakness.
Eni reported second-quarter adjusted earnings from continuing operations of $1.24 per American Depository Receipt (“ADR”), beating the Zacks Consensus Estimate of $1.15. However, the bottom line declined from the year-ago quarter’s $2.28 per ADR.
Total quarterly revenues of $21,567 million declined from $33,891 million a year ago.
Better-than-expected quarterly earnings resulted from an increase in refinery throughput volumes and higher hydrocarbon production. The positives were partially offset by lower average realized commodity prices.
Eni SpA Price, Consensus and EPS Surprise
Eni SpA price-consensus-eps-surprise-chart | Eni SpA Quote
Operational Performance
The company operates through four business segments — Exploration & Production, Global Gas & LNG Portfolio, Refining & Marketing and Chemicals, and Plenitude & Power.
Exploration & Production
The total oil and gas production in the second quarter was 1,611 thousand barrels of oil equivalent per day (MBoe/d), up from the 1,586 MBoe/d recorded in the prior-year quarter.
Liquids’ production was 757 thousand barrels per day (MBbl/d), up 2% from the year-ago quarter’s figure. Natural gas production increased 1% year over year to 4,491 million cubic feet per day.
The average realized price of liquids was $69.72 per barrel, down 34% from the $104.93 reported a year ago. The realized natural gas price was $7.05 per thousand cubic feet, down 7% from $7.60 a year ago.
Lower liquid and natural gas production hurt the company’s Exploration & Production segment. The segment reported a profit of €2,066 million, declining from the €4,867 million recorded in the June-end quarter of 2023.
Global Gas & LNG Portfolio
Eni’s worldwide natural gas sales in the June-end quarter were 11.15 billion cubic meters (bcm), down 17% year over year.
The integrated energy major’s Global Gas & LNG Portfolio business segment reported an adjusted operating profit of €1,087 million, turning around from the year-ago loss of €14 million. The upside was primarily driven by particular benefits relating to contractual triggers, renegotiations and settlements related to previous periods. The continued asset optimization and trading also aided the segment.
Refining & Marketing and Chemicals
For the June-end quarter, total refinery throughputs were 6.70 million tons (mmtons), down 10% year over year. Petrochemical product sales declined 24% year over year to 0.82 mmtons in the second quarter of 2023.
For the quarter under review, the segment reported an adjusted operating profit of €87 million, down from the €1,104 million reported in the year-ago quarter primarily due to lower production in all segments.
Plenitude & Power
Retail gas sales managed by Plenitude declined 8% year over year to 0.88 bcm. Power sales in the open market declined 13% year over year.
From Plenitude & Power, the company reported a profit of €165 million, reflecting an 18% year-over-year increase.
Financials
As of Jun 30, Eni had long-term debt of €22,043 million, and cash and cash equivalents of €11,417 million. Its debt to capitalization was 30.7%.
For the reported quarter, net cash generated by operating activities amounted to €4,443 million. Capital expenditure totaled €2,557 million.
Outlook
For 2023, Eni reiterated its total hydrocarbon production guidance of 1.63-1.67 MBoe/d, indicating an increase from the 1.61 MBoe/d reported in 2022. For the third quarter, it expects production of 1.63 MBoe/d.
The company expects to discover exploration resources of 700 MBoe this year.
The integrated energy major expects its capital expenditure budget to remain below €9 billion for the year, lower than the original guidance of €9.2 billion.
Zacks Rank & Stocks to Consider
Equinor currently carries a Zack Rank #4 (Sell).
Investors interested in the energy sector may look at the following companies that presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Baker Hughes Company BKR reported second-quarter 2023 adjusted earnings of 39 cents per share, beating the Zacks Consensus Estimate of 32 cents. Strong quarterly results were primarily driven by higher contributions from the Oilfield Services and Equipment, and Industrial & Energy Technology business units.
For 2023, Baker Hughes expects revenues of $24.8-$26 billion. The company projects revenues of $6.4-$6.6 billion for the third quarter.
Crestwood Equity Partners LP CEQP reported second-quarter 2023 adjusted earnings of $1.16 per unit, surpassing the Zacks Consensus Estimate of 26 cents. Strong quarterly earnings resulted from fantastic contributions from the Storage and Logistics business unit.
For this year, the partnership projects adjusted EBITDA of $780-$860 million.
Oceaneering International OII reported a second-quarter 2023 adjusted profit of 18 cents per share, which missed the Zacks Consensus Estimate of 30 cents. This underperformance was due to lower-than-expected operating income from the Subsea Robotics and Manufactured Products segments.
For 2023, Oceaneering projects consolidated EBITDA of $2275-$310 million and a continued free cash flow generation of $90-$130 million.
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Eni SpA (E) : Free Stock Analysis Report
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