We reaffirmed our Neutral recommendation on
) on Sep 23, 2013. Eni's outlook for the upcoming months is
favorable, given its 2013-2016 strategic plans to enhance
production and implement steps to control costs and recover
However, the positives are partially mitigated by a weak
macroeconomic scenario in Italy and Europe that is likely to
affect its performances going forward. Eni carries a Zacks Rank
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Eni's constant efforts to expand its upstream operations in
Cyprus, Egypt, Vietnam, Indonesia, Pakistan and Kenya will go a
long way in generating profitable growth in the future. Moreover,
project start-ups, inputs from big projects in Algeria, Iraq,
Australia, Russia and Egypt, as well as its strategic position in
non-conventional gas, are expected to augment volumes going
Italian oil and gas major expects its 2013 oil and natural gas
production to be higher than the reported 2012 level, given the
commissioning of major projects like Kashagan in Kazakhstan as
well as other assets including the Angola liquefied natural gas
and the gas assets in Algeria.
Moreover, stepped-up production at the fields commissioned last
year also raises our optimism on Eni's assured profitability over
the coming quarters. The company remains upbeat on its production
growth target of more than 4% annually in the said period and 3%
annually until 2022.
During the first half of 2013, Eni brought online six upstream
projects, including the delayed Kashagan oil field in Kazakhstan.
The company's successful exploration activities have augmented
its portfolio by 950 million barrels of oil equivalent resources.
The company is concentrating on the fast-track development of
conventional and synergic oil assets.
However, Eni believes that a certain degree of ambiguity still
looms with respect to the economic slowdown, in particular the
Euro zone. The European gas, refining and marketing, and
chemicals sectors also remain highly volatile. Overall demand
will likely remain weak due to the ongoing economic dormancy.
Other Stocks to Consider
While we prefer to remain on the sidelines for Eni, Zacks Ranked
#1 (Strong Buy) stocks -
China Petroleum & Chemical Corp.
Stone Energy Corp.
Enbridge Energy Management, LLC
) - could be good investment options for the short term.