Eni's Solid Upstream Overshadowed By Multiple Downstream Issues
Stephen Simpson, CFA
Stephen Simpson, CFA
Fri, Feb. 26, 8:24 AM
- Eni (NYSE:E) says its Q4 net loss more than tripled to €8.46B ($9.32B) from a year-earlier loss of €2.38B, as revenue fell by more than a third to €13.89B.
- A weakening euro, down 12% vs. the dollar in Q4, and an increase in production tempered what could have been an even bigger loss; Q4 output jumped 14% Y/Y to 1.88M bbl/day, the company's highest level in the past five years.
- However, shares are higher in European trading and +4.9% in U.S. premarket, as the Q4 standalone adjusted loss of €200M, after €4.7B in writedowns, came in better than analyst expectations.
- Eni says it will cut 2016 capital spending by 20% after a 17% reduction in 2015, but does not specify where the cut will be made; it gave no update on future dividends after last year being the first global oil major to cut its payout to shareholders.
- The company revised its view of prices for 2016-19 to $65/bbl from its previous forecast of $90/bbl, but the lower figure is still substantially above current Brent prices.
Tue, Feb. 23, 8:47 AM
- Oil and gas producers in the U.K. North Sea will spend 40% less this year than in 2014 as low crude prices force them to tighten budgets, which has the potential to chop future production in half by 2025 if new investment opportunities fail to materialize, the main trade body representing the sector warns.
- Oil & Gas U.K. forecasts a drop in capex to £9B ($12.7B) this year from £11.6B last year and £14.8B in 2014, a decline that would affect the whole supply chain, and operators are expected to approve less than £1B of new projects, down from an average of £8B/year in the past five years.
- Even with extensive cost cuts, Oil & Gas U.K. says 43% of all U.K. North Sea oil fields would operate at a loss if crude prices stay at ~$30/bbl this year, and more than 100 fields would cease production during 2015-20.
- Top U.K. North Sea producers include BP, RDS.A, RDS.B, COP, CVX, TOT, E, CEO
Mon, Feb. 22, 11:59 AM
- Iran’s potential to add to oil industry problems by increasing its output looks to be a major topic at the upcoming IHS CERAWeek conference, but western companies remain wary of investing in the country, WSJ reports.
- "It will take a long time to fully develop the resources that Iran has access to,” Statoil (NYSE:STO) CEO Eldar Saetre says; the Norwegian oil company had operations in Iran until 2009 but was plagued by cost overruns and corruption allegations.
- The prospect of the companies returning to Iran also has sparked a rancorous debate that mirrors larger divisions between pragmatists and hard-liners; Iran’s pre-sanctions contracts with western firms had been seen as onerous money losers, but new terms would allow companies to work on fields longer and earn more money from them, a notion that hard-liners are resisting, thus effectively pushing back the time frame for international oil companies to return.
- European oil companies such as Royal Dutch Shell (RDS.A, RDS.B), Total (NYSE:TOT) and Eni (NYSE:E) have said they are interested in Iran but need to know the terms for working there.
Sat, Feb. 13, 8:25 AM
- Large energy companies will slash dividend payouts by a total of $12B this year, bringing global payouts down 9% Y/Y to $147B, according to Markit's dividend forecasting unit.
- Ten of the world's large-cap oil and gas companies are set to cut their dividend in 2016, Markit predicts, including ConocoPhillips (NYSE:COP), which already has slashed its payout for 2015 but likely will announce additional cuts by year-end.
- The other nine large-cap energy firms Markit sees cutting their dividend this year: Anadarko Petroleum (NYSE:APC), Ecopetrol (NYSE:EC), Eni (NYSE:E), Kinder Morgan (NYSE:KMI), Noble Energy (NYSE:NBL), Sinopec (NYSE:SNP), Cnooc (NYSE:CEO), PetroChina (NYSE:PTR) and Woodside Petroleum (OTCPK:WOPEF, OTCPK:WOPEY).
Wed, Feb. 10, 11:47 AM
- Eni (E -0.8%) is in the early stages of exploring a sale of gas and power retail assets that could fetch as much as €2B ($2.3B), depending on which assets are included, Bloomberg reports.
- If Eni goes ahead with the auction, the business could attract P-E firms and utility companies, according to the report.
- Eni recently approved raising €2B in debt and scrapped its dividend and €6B stock buyback plan as it looks for ways to conserve cash.
Mon, Feb. 1, 3:39 PM
- Standard & Poor’s lowers its credit rating on Royal Dutch Shell (RDS.A, RDS.B) and places Shell, BP, Eni (NYSE:E), Repsol (OTCQX:REPYF, OTCQX:REPYY), Statoil (NYSE:STO) and Total (NYSE:TOT) on ratings watch with potential negative implications.
- S&P's moves, which include downgrading Shell's ratings to A+/A-1 from AA-/A-1+, comes three weeks after the ratings agency lowered its price assumption for Brent crude to $40/bbl for 2016.
Tue, Jan. 26, 1:49 PM
- Oilfield services company Saipem (OTCPK:SAPMY) and energy group Ansaldo Energia (OTC:ASDOF) are among Italian companies that signed deals valued at ~€17B ($18.36B) during Iranian Pres. Rouhani’s visit to Europe, his first overseas trip since the European Union lifted sanctions on Iran.
- Eni (E +3.3%) - a majority owner of Saipem - also is among European companies expected to move quickly to resume business with Iran, which is eager to drum up foreign investment in sectors including energy after years of sanctions.
- Saipem entered an MoU with the Parsian Oil and Gas Development Co. to upgrade two refineries and a second one with the National Iranian Gas Co. on pipeline projects covering 1,800 km (1,100 miles); no financial terms were released.
- Italian steel firm Danieli (OTC:DNIFY) said during the visit it would sign deals valued at ~€5.7B, and French car maker Peugeot (OTCPK:PEUGF) is expected to complete an agreement to manufacture cars in Iran as part of a 50-50 JV with an Iranian automaker valued at more than €300M.
Thu, Jan. 21, 6:24 PM
- European companies and trading houses are not rushing to buy Iranian oil because of legal uncertainties over the lifting of sanctions that are likely to take weeks to clarify, Reuters reports.
- Iran ordered a 500K bbl/day increase in oil production after international sanctions were lifted on Saturday, but many European firms reportedly are wary of violating other sanctions that were imposed by the U.S. and have not been lifted.
- The CEO of Russia's Lukoil (OTCPK:LUKOY, OTC:LUKOF), Vagit Alekperov, says it remains unclear whether the company's refineries in Italy or the Netherlands are free of legal risks to buy Iranian oil, and the head of Swiss trading house Mercuria also believes Iranian oil imports into Europe remain complicated.
- Alekperov says he thinks it will take 5-7 years for Iran to raise output significantly, and that this would happen only if the country enacts the right legislation to compete for investments.
- Market players, however, assume that companies which bought Iranian crude before the sanctions - such as Royal Dutch Shell (RDS.A, RDS.B), Total (NYSE:TOT), Eni (NYSE:E), and traders such as Glencore (OTCPK:GLCNF, OTCPK:GLNCY) and Vitol - will resume purchases at some point later this year.
Tue, Jan. 19, 4:59 PM
- Eni (NYSE:E) receives conditional approval from Norway's Petroleum Safety Authority to start using its floating oil production and storage facility at the world's northernmost oil field, the Goliat field in Norway's Barents Sea.
- Eni, which operates the field and owns a 65% stake, and Statoil (NYSE:STO), which holds the remaining 35%, must carry out a planned verification and confirm that the facility is ready before starting to pump oil, the regulator says.
- Production from Goliat, which has been delayed several times and was supposed to start before Christmas, now could begin by next month at the earliest.
Tue, Jan. 19, 2:43 PM
- Anadarko Petroleum (APC -4.3%) says it achieved first oil at its Heidelberg field, the company's second of a pair of truss spar developments in the deepwater Gulf of Mexico.
- Lucius, the spar’s sister development, began production last January; the spars have design capacities of 80K bbl/day and 80M cf/day.
- APC operates Heidelberg and holds a 31.5% interest; partners include Freeport McMoRan (FCX -8.2%) and Eni (E -0.5%), each with a 12.5% stake; Statoil (STO -1.1%), with 12%, and Exxon Mobil (XOM -2.5%) and Cobalt Energy (CIE -10.4%), with 9.375% each.
Fri, Jan. 15, 3:20 PM
- Nymex crude oil settled -5.7% at $29.42/bbl, its lowest level since November 2003, with concerns that Iran will soon add to the world's glut of crude supplies added to fears about an economic slowdown in China.
- When a decade of trade and banking sanctions against Iran end, perhaps as soon as Monday, the country could lift exports by 500K bbl/day and gradually raise shipments by the same amount again; Iran reportedly has 22 VLCCs floating off its coast, with 13 fully or almost fully loaded.
- Among major energy companies today: XOM -1.8%, CVX -2.2%, RDS.A -5%, BP -5.2%, COP -4.9%, TOT -3.7%, PBR -8.6%, E -4.5%, TOT -3.7%, STO -2.5%, MRO -10.2%, HES -3.6%, OXY -1.8%, DVN -5.8%, APA -4.9%, EOG -3.8%, APC -7.9%, PXD -2.6%, CXO -4.9%.
- ETFs: UNG, USO, OIL, XLE, UGAZ, UCO, DGAZ, UWTI, VDE, ERX, OIH, SCO, XOP, BNO, BOIL, GAZ, DBO, DWTI, ERY, FCG, DIG, GASL, DTO, DUG, KOLD, BGR, USL, XES, IYE, IEO, UNL, IEZ, DNO, FENY, PXE, PXI, PXJ, FIF, DBE, OLO, SZO, NDP, RYE, DCNG, RJN, FXN, OLEM, DDG
Thu, Jan. 14, 3:26 PM
- Energy stocks are broadly higher as U.S. crude oil bounces off $30/bbl to end pit trading at $31.22, +2.6%; the SPDR Energy ETF (XLE +5.1%) soars 5%, with 36 of its 40 equity components trading higher, after closing yesterday at its lowest level since September 2010.
- Exxon Mobil (XOM +5.5%) and Chevron (CVX +5.9%) are the Dow's top two gainers; and pipeline companies sport strong showings with Kinder Morgan (KMI +8.2%), Plains All American Pipeline (PAA +11.7%) and Williams Cos. (WMB +27.4%) among the biggest winners.
- Among other major energy movers: ETE +22.6%, BP +7.6%, MRO +7.5%, OXY +7.1%, PBR +7%, COP +7%, RDS.A +6.7%, SE +6.1%, PSX +6.1%, ETP +6.1%, EPD +5.3%, APA +5%, E +4.6%, HES +4.1%, MPC +4.1%.
- Amid overwhelmingly negative sentiment, a few analysts are venturing out to say the worst may be over or nearly so: Deutsche Bank’s Torsten Slok thinks "we now have the worst behind us in terms of the negative impact of falling oil prices on the economy," and Gluskin Sheff’s David Rosenberg argues that the oil selloff is getting “long in the tooth.”
- ETFs: USO, OIL, XLE, UCO, UWTI, VDE, ERX, OIH, SCO, XOP, BNO, DBO, DWTI, ERY, FCG, DIG, GASL, DTO, DUG, BGR, USL, XES, IYE, IEO, IEZ, DNO, FENY, PXE, PXI, PXJ, FIF, OLO, SZO, NDP, RYE, FXN, OLEM, DDG
Wed, Jan. 13, 7:24 PM
- The head of Libya’s state-run oil company says he is meeting with major oil companies including BP, Total (NYSE:TOT) and Eni (NYSE:E) to try to jump-start the country’s oil production potential just days after Islamic State militants inflicted heavy damage to the key Es Sider oil export terminal.
- "The situation will stabilize once a unity government is formed. I am optimistic this will happen,” Mustafa Sanallah tells WSJ.
- If a unity government is formed, Sanallah says production could rise to 1.2M bbl/day but the recent Islamic State attacks will delay the return of 300K bbl/day of output, about 20% of the country’s capacity; Libya currently is pumping ~380K bbl/day, Sanallah says.
Tue, Jan. 12, 11:49 AM
- Total (TOT -1%) is upgraded to Buy from Hold and Eni (E -0.4%) is upped to Hold from Underperform, while Occidental Petroleum (OXY -2.8%) is downgraded to to Hold from Buy at Jefferies.
- TOT management seems to be “navigating the challenging macro well,” Jefferies analyst Jason Gammel says, adding that while earnings are showing resilience, operating cost reductions have been effective and disposals continue.
- The firm cuts OXY because of the company's high leverage to oil prices and its valuation appears less attractive following revised estimates; reduced capital spending will inevitably result in lower production growth, Gammel says, adding that he expects OXY will generate a average production compound annual growth of just 2% from 2015-20.
- Eni’s shares have underperformed peers and there is limited downside, Gammel says.
Mon, Jan. 11, 10:43 AM
- Eni (E +1.6%) says it has started production from the Mpungi Field in the West Hub development project offshore Angola, with plans to ramp up production to ~199K bbl/day of oil per day later this quarter.
- The start-up of Mpungi field follows the West Hub’s first oil from the Sangos field in November 2014 and the Cinguvu field in April 2015.
- The West Hub project encompasses the development of the Sangos, Cinguvu, Mpungi, Mpungi North, Ochigufu and Vandumbu fields.
Dec. 22, 2015, 2:19 PM
- Eni's (E +0.9%) Goliat oil field offshore northern Norway faces another delay, as Norwegian regulators have requested more information about safety and other issues before they approve the start of production.
- Eni now expects production at Goliat - due to become the world's most northerly producing oil field but two years behind schedule and over budget - to begin during the first few weeks of 2016.
- Even when consent is granted it could take up to five weeks to start production at Goliat due to the time given for the appeal process, Eni says.
- Operator Eni has a 65% stake in the field, and Statoil (STO +1.5%) holds the remaining 35%.
Eni SpA engages in the exploration and production of oil and natural gas; processing, transportation, and refining of crude oil; transport of natural gas; storage and distribution of petroleum products; and the production of base chemicals, plastics and elastomers. It operates through the... More
Sector: Basic Materials
Industry: Major Integrated Oil & Gas
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