Eni S.p.A (NYSE:E) announced that it has downwardly revised 2020 capital budget in the wake of a weak crude pricing scenario.
The company has decided to lower capital budget for 2020 by roughly €2 billion, representing 25% of the total budget. The integrated energy firm will also slash its planned capital spending for 2021 by roughly €2.5-€3 billion, representing 30-35% of the budget. In addition to capital spending reduction, the company has also decided to cut operating expenditure for 2020 by almost €400 million.
With oil price now in the bearish territory since the coronavirus pandemic is hurting global energy demand, the outlook for exploration and production business seems gloomy. Thus, energy firms with significant presence in upstream businesses are restricting operational activities and thereby reducing capital budget. Other energy firms that followed suit are Cimarex Energy Co. (NYSE:E) , Pioneer Natural Resources Company (NYSE:PXD) and EOG Resources Inc. (NYSE:EOG) .
Given lower spending, the company projects 2020 production volumes to decline year over year. In 2020, Eni expects to produce daily oil equivalent volumes in the range of 1.8-1.84 million barrels per day, indicating a decline from the prior-year’s 1.87 million barrels. The average annual production volume estimate for 2021 is the same as 2020, Eni added.
Importantly, the company believes that the measures taken so far will help it maintain strong balance sheet and dividend payments amid the coronavirus pandemic.
Headquartered in Rome, Italy, Eni currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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