Italian oil major EniSpA’s (E) stock price surprised with a marginal drop of 7% following the news that it has received a three-year extension to the exploration period from the Angolan authorities for its prolific Block 15/06.
Located in offshore Angola, at a distance of about 350 kilometers north-west of the capital Luanda and 130 kilometers east of Soyo town – Block 15/06, was acquired by Eni in 2006 following an international bid round.
The exploration period had originally terminated in Nov 2014. Thereafter, Eni demanded an extension so as to finish off the exploration activities already established. The three-year plan includes the drilling of three wells and 1,000 square kilometers of 3D seismic.
Depending on the success of the exploration activities, the existing production facilities will be utilized for the rapid development of new discoveries.
The extension also comprises an area adjacent to the Block 15/06. The block includes the Reco-Reco discovery, which is projected to hold approximately 100 million barrels of oil in place. Production in this area is expected to commence rapidly due to the synergies with existing infrastructure.
Eni has drilled 24 exploration and appraisal wells, as well as discovered more than 3 billion barrels of oil in place and 850 million barrels of reserves, in Block 15/06.
Eni operates Block 15/06 with a 35% stake, while Sonangol EP is the concessionaire. The other partners in the joint venture include Sonangol Pesquisa e Produção, SSI Fifteen Limited and Falcon Oil Holding Angola SA, holding 35%, 25% and 5%, respectively.
Angola has a strategic importance in Eni’s organic growth. The company’s presence in Angola dates back to 1980. In 2014, average daily production was about 90,000 barrels of oil equivalent.
Currently, Eni carries a Zacks Rank #5 (Strong Sell). Better-ranked stocks from the same industry include Seadrill Partners LP (SDLP), Spectra Energy Partners, LP (SEP) and NextEra Energy Partners, LP (NEP). Each of these stocks sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment