Eni SpA (E, Financial) jumped 2.12% to $34.24 per share on the New York Stock Exchange on Friday following the release of results for the fourth quarter and full year of 2018.
Based in Rome the Italian multinational oil and gas company recorded a 76.4% year-over-year decline in net earnings to approximately $569.4 million but a 50% year-over-year growth in adjusted net earnings to approximately $1.66 billion in the final quarter of 2018.
Regarding the full year 2018, Eni SpA closed the reporting period with net earnings of approximately $4.99 billion which reflects a 31% increase from 2017 and with adjusted net earnings of $5.42 billion, which represents a 101.5% growth from the prior year.
The adjusted operating profit doubled to $13.28 billion and was shared amid the following business segments: Exploration and Production contributed with $12.81 billion, Gas & Power gave $642.46 million while Refining & Marketing and Chemicals added $448.78 million.
Results were achieved thanks to a 31% year over year rise in the average Brent price to $67.76 per barrel and to a hydrocarbon production level that, at 1.85 million barrels per day, was the highest ever achieved by the Italian oil group in the Upstream division. Also, the target of $22.5 cash flow per barrel was accomplished with four years in advance
Compared to 2017, the hydrocarbon production grew 2%.
2018 has demonstrated to be strong also from a cash flow generation standpoint for Eni SpA with total funds from operations jumping 41% to $16.12 billion.
This impressive cash flow enabled the Italian oil supermajor to trim the total debt by 20.6% to $9.8 billion and to allocate approximately $3.543 billion for dividend payments. Total liquidity available on hand and short-term securities was approximately $18.6 billion at Dec. 31.
Capital expenditures increased by nearly 9% to about $9.4 billion.
Net proven reserves were 7,153 million barrels of oil equivalent at Dec. 31, 2018, versus 6,990 million barrels of oil equivalent at Dec. 31, 2017. The improvement resulted from a reserves replacement ratio of 124% bringing the average for the past three years through 2018 to 131%.
During the year Eni SpA has strengthened the upstream portfolio with the creation of the VÃ¥r Energi exploration and production company in Norway and thanks to a more significant presence in the Middle East. The Italian oil and gas company has also upgraded the capacity of the downstream portfolio with the purchase of a 20% interest in three refineries at Ruwais in the Emirates of Abu Dhabi.
The global portfolio of Eni SpA is now more diversified and prepared to challenge future cyclical pressures.
In addition, based on the financial 2018 results the company will propose to the board of directors the payment of Euros 83 cents (94 cents) cash dividend. The directors will hold the meeting on March 14. The proposed dividend, which includes an interim amount of 42 euros cents already distributed in September 2018, represents a 3.7% increase from the previous one. The balance will be paid on May 22 and the ex-dividend date is scheduled for May 20.
Based on the share price of $34.24 at close Friday, the stock forward dividend yield is 5.69% versus an industry median of 5.35%. For the 52 weeks through Feb. 15 the share price climbed 1%, is above the 50- and 100-day simple moving average lines though still below the 200-day SMA line. The stock has a 52-week range of $29.75 to $40.15. The stock has a market capitalization of roughly $62.06 billion.
The 14-day Relative Strength Indicator is 64.07 suggesting that the stock is neither overbought nor oversold.
Wall Street has issued an overweight recommendation rating indicating that the stock is foreseen to outperform either the industry or the market. The average target price of $40.26 per share reflects a 17.7% upside from the share price at close Friday.
Disclosure: I have no positions in any security mentioned.
