Eni SpA (E) is currently busy with its offshore gas production initiatives. The company said yesterday that it has started production at its offshore platform “Annamaria B”, located off the coast between Italy and Croatia.
Annamaria B has begun producing at the same rate as the other Croatian platform Annamaria A, at about 800,000 cubic meters per day. But Eni is planning to increase the rate to 1.2 million cubic meters per day.
The company conducts its major exploration and production activities for hydrocarbons in Italy, Croatia, North and West Africa, North Sea, the Gulf of Mexico, the Middle and the Far East, Caspian Sea, Australia and Latin America.
Though the company outlines a flat upstream in 2010, we view this offshore activity as a positive factor. However, the company is experiencing challenges on the domestic front due to increasing competition.
We are also concerned about the uncertainty associated with the group’s domestic gas business as the regulator continues to take an active interest in the company and the relative profitability of segments across the gas chain.
In its 2010–2013 strategic plans, the company reduced its production growth target to 2.5% from 3.5%. We believe that this growth target also carries a higher degree of delivery risk as the bulk of it comes from risky projects in Iraq, Venezuela and Kazakhstan.
We remain unchanged with our Underperform rating for Eni SpA ADRs.
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