Stephen Jewkes

MILAN (Reuters – Eni, an Italian energy company beat all expectations. Third-quarter profits rose back to preCOVID levels. This was boosted by rising gas prices which could provide additional earnings lift in the coming months.

According to the operating cash guidance lifted by the group for 2017, it reported Friday an adjusted net loss of 1.43 Billion Euros ($1.7B) against a loss in 153 M euro a year prior. That beats a forecast of 1.08 Billion euro.

In recent months, gas prices rose as tight supply met strong demand from countries recovering from the pandemic. This has boosted the bottom line of many oil companies.

Eni said adjusted operating profit for its Global Gas & LNG Portfolio (GGP) doubled in the third quarter from the second to 50 million euros, adding it expected to reach 500 million euros for the year.

It stated that this guidance may be revised upward if there are persistent volatile or tight market conditions.

Equita, a Milan-based broker said that “we believe the better results than anticipated and improved outlook have positive implications on estimates and the stock.”

The Eni share price was up by 1.90% at 1035 GMT, while the European oil & gas index rose 0.08%.

Before any adjustments in working capital for replacement costs, cash flow from operations soared 88% and reached 3.3 billion Euros. The increase allowed the company to improve its guidance, which was previously higher than 10 billion.

Claudio Descalzi, CEO, stated that cash generation and cost management in the first nine month “more than covers” the total 2021 dividends and buybacks.

Eni offered a positive outlook on the year ahead for upstream businesses.

The second quarter saw an increase in oil and gas production of 6% to 1.688 billion barrels of crude oil equivalent per day (mboe/d), and 1.76 million barrels expected for the last three months.

Eni launched one the most ambitious clean up strategies in the sector, promising carbon neutrality by 2020 and moving to clean energy when it stops producing oil.

The company recently established a new division that includes renewable energy and retail. It plans to sell a small percentage of the shares to fund this green initiative.

Friday’s announcement by the company stated that 2 gigawatts (or more) of its renewable energy capacity would be installed or under construction this year, compared to less than 1GW in 2013.

In 2030, the company aims to have a renewable power capacity of 15 GW.

($1 = 0.8572 euros)