) adjusted fourth quarter 2011 earnings per ADR of $1.16 (€0.43 per
share) experienced a downfall of 9.4% from $1.28 per ADR (€0.47 per
share) earned in the year-earlier quarter. However, full year 2011
earnings of $5.35 per ADR (€1.92 per share) improved 6.2% from the
year-ago level of $5.04 per ADR (€1.90 per share).
2011 performance was buoyed by significant achievements from the
Exploration & Production segment. However, the positives were
partially mitigated by a weak macroeconomic situation in Italy and
Europe that has impacted its performances in Gas & Power,
Refining & Marketing and in the petrochemical sector.
Total revenue in the quarter jumped 7.1% to €30.10 billion
($40.61 billion) from the year-ago revenue of €22.70 billion
($38.23 billion). Revenue for the full year amounted to €109.59
billion ($152.59 billion), up 11.2% from the year-earlier level of
€98.52 billion ($130.79 billion).
Total liquids and gas production in the quarter was 1,678
thousand barrels of oil equivalent per day (MBoe/d), down more than
14% year over year, mainly due to the interruption of operations at
several Libyan fields and the termination of the GreenStream
pipeline activity because of the political turmoil.
Liquids production in the quarter was 896 thousand barrels per
day (MBbl/d), down 14.6% from the year-ago level of 1,049 MBbl/d.
Natural gas production declined more than 13% to 4,345 million
cubic feet per day (MMcf/d), reflecting less output from Libya and
a decline in mature fields. Nevertheless, the company achieved
organic growth in Congo, Italy and Egypt.
The company's gas sales were 25.47 billion cubic meters (Bcm),
down 11.4% year over year, reflecting weak demand as well as
mounting pressure from competitors.
As of December 31, 2011, the company had cash and cash
equivalents of €1.50 billion ($1.94 billion) and long-term debt
(including current portions) of €25.14 billion ($32.55 billion).
The debt-to-capitalization ratio was approximately 29.4%.
In the reported quarter, net cash generated by operating
activities amounted to €3.19 billion ($4.30 billion). Capital
expenditure totaled €3.89 billion ($5.25 billion).
Eni expects international oil prices to remain strong for the
year 2012, which will be supported by robust demand growth from
China and other emerging economies. However, a certain degree of
ambiguity still looms with respect to the economic slowdown,
particularly in the Euro-zone, and volatile market conditions.
The company expects its 2012 oil and natural gas production to
be in line with the 2011 level of 1.25 MMBoe/d on the ramp-up of
Italy and Iraq activities as well as start-up of new fields in
projects in Algeria and offshore Angola and the gas joint
development in Siberia.
Worldwide gas sales are expected to be on par with the 2011
level. Despite experiencing lackluster demand growth in Italy,
management seek to boost sales volumes and market share as well as
maintain and develop its retail customer base. Outside Italy the
main growth drivers will be in the key markets of France and
Germany/Austria and opportunities in the Far East.
Again, refining throughputs are expected to be in line with the
With the expected strengthening of the global economic scenario
along with production ramp-up in the existing fields of Italy and
Iraq, we believe that Eni offers ample long-term visibility into
profitability in the coming quarters. Notably, new field start-ups
at certain large projects in Algeria and offshore Angola and the
gas joint development in Siberia are also expected to have a
However, we are concerned about Eni's refining business as its
underlying fundamentals are still weak following the political
disturbances in the Middle East that could suppress production.
Immense competition from peers such as
) is also a threat to the company. Recently, Statoil reported
better-than-expected fourth quarter 2011 earnings, mainly
attributable to higher liquids and gas prices.
Eni currently holds a Zacks #4 Rank, which translates into a
Sell rating. Our long-term Neutral recommendation on the company
remains unchanged at this stage.
ENI SPA-ADR (
): Free Stock Analysis Report
STATOIL ASA-ADR (
): Free Stock Analysis Report
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