Behind Eni’s Stock Performance after 2Q16



Eni’s stock performance

Eni SpA (E) announced its 2Q16 earnings on July 29, 2016. On the same day, Eni opened at $30.23, marginally lower than the previous day’s close of $30.53. Eni saw highs of $30.69 and lows of $30.13 during that day and closed at $30.65—around 0.4% higher than its previous day’s close. After its 2Q16 earnings (from July 29, 2016, to August 2, 2016) ENI’s stock fell by 3.1%. This is in line with peers Statoil (STO) and PetroChina (PTR).

In the same period, peers STO and PTR fell by 2.8% and 1.2%, respectively. Crude oil and natural gas prices fell by 4.5% and 4.9%, respectively. Notably, if you’re looking for exposure to energy sector stocks, you might consider the Energy Select Sector SPDR ETF (XLE).

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ENI’s 2Q16 capex update

In 2Q16, Eni (E) incurred capital expenditure, or capex, of 2.4 billion euros, or about $2.7 billion. Eni expects oil market fundamentals to be weak in 2016. For 2016, Eni plans to lower its capex by 20% over 2015. ENI plans to focus on core and competitive projects. ENI also plans to monitor its exploration costs and activities closely.

According to Eni’s management, “This capex optimization is not expected to negatively affect production growth, which is confirmed at an average growth rate of above 3% across the plan period. The Group’s leverage is projected to remain within the 0.30 threshold thanks to the closing of the Saipem transaction, optimization of the underlying performance and assuming to finalize by year- end the planned portfolio management deals.”

Now let’s discuss Eni’s implied volatility.


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