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Eni (E) to Restructure, Separate Green Energy From Oil & Gas

Eni S.p.A. E recently announced that it will undergo a major restructuring of the company with focus on energy transition. The company is creating two business groups: Natural Resources and Energy Evolution. The new structure is expected to be implemented in the coming weeks. The news of restructuring comes at a time when the energy industry is suffering from demand destruction caused by coronavirus-induced lockdowns.

Natural Resources will incorporate the company’s traditional oil and gas activities. It will use carbon capture and storage technologies to reduce carbon footprint and fight against climate change. This group will be responsible for the forestry conservation projects. The head of upstream activities, Alessandro Puliti will lead this unit.

Energy Evolution will focus on the transition from fossil fuels to renewable sources. It will generate power from biomethane and renewables. This group will be run by the present Chief Financial officer Massimo Mondazzi. It will also be involved in evolution of the company’s refining and chemical businesses to develop decarbonized products.

Earlier, Eni’s Chief Executive Officer Claudio Descalzi announced the company’s plans to build 55 gigawatts of renewable energy projects by 2050. Within this period, the company expects to reduce emissions of products by 80%. The move is expected to be in line with the Paris Agreement.

The restructuring process is expected to position the company well for creating tremendous value and a sustainable business, while focusing on energy transition to a greener future. This is also expected to integrate exploration, forestation, refining, and renewables in a profitable and sustainable manner.

Price Performance

Eni’s shares have gained 1.7% from the beginning of the second quarter compared with 14.8% rise of the industry it belongs to.

Zacks Rank & Stocks to Consider

Eni currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Chesapeake Energy Corporation CHK, CNX Resources Corporation CNX and Comstock Resources, Inc. CRK, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Chesapeake Energy delivered an average positive earnings surprise of 42.8% in the last four quarters.

CNX Resources beat earnings estimates thrice and met once in the last four quarters, with average positive surprise of 111.5%.

Comstock Resources’ 2020 sales are expected to gain 33.7% year over year.

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