Italian energy giant, Eni SpA (E) has reaffirmed its commitment to Egypt at a meeting with the country’s prime minister HE Essam Sharaf in Cairo this week. The company intends to invest $3.0 billion in Egypt over this year and next that would in turn speed up operational activities in the region to capitalize on rising oil prices.
Eni stated that it would accelerate its activities in Western Desert, Mediterranean and Sinai regions. Stepping up of production from new discoveries, exploration and development as well as drilling of additional wells are also included in the deal. The company expects to drill 12 exploratory wells.
Eni has also scheduled a training program for national staff working in Petrobel and Agiba joint ventures with Egyptian General Petroleum Corporation (EGPC).
Since 1953, Eni remains engaged in oil and gas exploration and production activities in Egypt. The company is the first international operator in the country with daily production of around 500,000 barrels of oil equivalent, including the share produced by EGPC.
We believe Eni’s outlook for the upcoming months is favorable given its 2011–2014 strategic plans to enhance production and implement steps to control costs and recover profitability. The company remains upbeat on its production growth target, expecting it to increase more than 3% annually in the said period. Eni expects hydrocarbon production to increase to more than the 2.05 million barrels of oil equivalent per day level by 2014.
Moreover, the company is confident about its long-term production outlook and aims to reduce costs as well as strengthen the Refining and Marketing segment. Eni’s portfolio of assets –– spanning across Nigeria, Egypt, Angola and the United Kingdom –– are also expected to boost its performance in the coming quarters.
However, we remain concerned by unpredictable global economic conditions, volatile oil and gas fundamentals and operational disruptions in international regions. Additionally, Eni’s high debt burden and stiff competition in the industry are major hindrances. Therefore, we are maintaining our Neutral rating on the stock and expect the company to perform in line with its peers like Statoil ASA (STO), and the industry as a whole.
The company retains a Zacks #3 Rank, which translates to a short-term Hold rating.
ENI SPA-ADR (E): Free Stock Analysis Report
Be the first to comment