Eni SpA (E) announced a major oil discovery in Block 15/06, offshore Angola. Initial evaluations indicate that the discovery holds a significant volume of high quality oil. Located at a distance of 100 kilometers from the coast and at a depth of 470 meters, the reservoir confirms a total of 450 meters of thick gross oil.
 
Eni has the operatorship in the block with a 35% working interest. Other notable partners are Total SA (TOT) and Petrobras (PBR). The company has a presence in the country since 1980 with a current production of nearly 130,000 barrels of oil equivalent per day.
 
With new fields continuously coming online across Eni’s footprint — particularly in Italy, Algeria, Norway, Iraq and Angola — its near-term upstream production prospect is gaining traction with a strong strategic rationale. This discovery will strengthen Eni’s position in Angola, and affirm the country’s core position in Eni’s organic production growth strategy.
 
Apart from Angola, Eni is also active in other African countries. In December last year, it purchased interests in two blocks in Uganda from Heritage Oil for nearly $1.4 billion. In addition, Eni is gaining momentum in Iraq as it recently stated that production volumes at Zubair oilfield will reach 250,000 barrels per day (Bpd) from the current rate of 180,000 Bpd.
 
Eni’s strong presence in North Africa and the Middle East is likely to result in growth. We believe that the company is looking to mitigate mature field decline rates through a combination of production optimization and entry into the new areas. Our Neutral recommendation for Eni remains unchanged with Zacks #3 Rank (Hold).
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