Eni SpA E inked a Unitization and Unit Operating Agreement (UUOA) with Anadarko Petroleum Corporation APC following which, both the companies set out the unitization of Area 4 and 1 in the Rovuma Basin, offshore Mozambique. The stock price of Eni, however, declined 1.1% after the announcement.
The agreement, which was signed in full agreement with all the concessionaries of the projects, relates to the development of natural gas reservoirs overlapping Mamba and Prosperidade in Area 4 and 1, respectively. Eni East Africa (“EEA”) operates Area 4, while Area 1 is operated by Anadarko Mozambique Area 1 Ltd. (“AMA1”).
Per the UUOA, the development of the intercommunicating reservoirs will be initially executed in a separated but coordinated manner by the two Areas till natural gas reserves reach the 24 trillion cubic feet (Tcf) mark. Each Area is expected produce12 Tcf of natural gas.
Thereafter, future developments will be jointly carried out by Area 4 and Area 1 concessionaires through a joint operator, following an equal joint venture between Eni East Africa and Anadarko Mozambique Area 1.
The UUOA, which was developed in close association with 11 concessionaires, represents a reasonable agreement for all parties involved in the two Areas. The agreement is awaiting final consent by the Government of Mozambique.
Eni is responsible for operations in Area 4. Eni has a 50% indirect interest, while CNPC owns a 20% indirect interest through EEA, which holds a 70% stake in Area 4. The other concessionaires are Galp Energia, KOGAS and Empresa Nacional de Hidrocarbonetos (“ENH”), each holding a stake of 10%.
Anadarko, the operator of Area 1, holds a 26.5% stake through AMA1. The other concessionaires are ENH, Mitsui E&P Mozambique Area 1, Beas Rovuma Energy Mozambique, BPRL Ventures Mozambique, ONGC Videsh and PTTEP Mozambique Area 1, holding 15%, 20%, 10%, 10%, 10% and 8.5%, respectively.
Eni carries a Zacks Rank #3 (Hold). Some better-ranked players from the broader energy sector are Energy Transfer Equity, L.P. ETE and Boardwalk Pipeline Partners, LP BWP. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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