Italian oil and gas company, Eni SpA (E) plans to acquire stakes in Pokrovskeo and Zagoryanska licenses in east Ukraine from Cadogan Petroleum. The deal is a part of the Italian giant’s strategy of strengthening its position in East Europe. The expected date of completion is June 30, 2011, subject to the Cadogan shareholders as well as the Ukrainian Anti-Monopoly Commission approval.
Under the agreement, Eni will acquire 60% share in the Pokrovskoe license. The company will purchase 30% interest at the onset and keep the opportunity to buy the remaining 30% open for the future. Both licenses are situated in the Dniepr-Donetz basin, reckoned one of the most potential regions in Ukraine.
Eni will pay $38 million and intends to invest 100% of the planned work program, which is estimated at approximately $30 million. The company is also entitled to pay an additional amount of up to $90 million, subject to a positive outcome and production license contract wins.
Both Eni and Cadogan intend to proceed with the appraisal program on the blocks to assess hydrocarbons generated in the earlier drilling operations. The $30 million work agenda comprises a drilling and workover campaign to get four wells on-stream this year. Further, the program also aims at setting up a full field development plan on the basis of the ongoing studies.
In a separate development, Eni announced that it has successfully appraised the Sankofa discovery offshore Ghana as part of its drive to expand in Africa. The Sankofa-2 well was tested and delivered about 840,000 cubic meters of premium gas and 1,000 barrels of oil equivalent per day (Boe/d) of high quality 52° API condensate.
Last month, Eni disclosed its 2011–2014 strategic plans to enhance production, initiate a program to save costs and recover profitability in the refining and marketing segments. The company remains upbeat on its production growth target, expecting it to increase more than 3% annually in the said period, fueled by major organic developments and contribution from key areas such as Iraq, Venezuela, Angola and Russia.
Given that the Italian company is well on track with its upstream activities and remains committed to its strategic plan to boost production through cost effective means, it holds a Zacks #1 Rank, equivalent to a Strong Buy rating.
Based in Rome, Italy, Eni with its consolidated subsidiaries is engaged in oil and gas, electricity generation, petrochemicals, oilfield services and engineering industries. The company competes with Statoil ASA (STO), PetroChina Co. Ltd. (PTR) and Chevron Corp (CVX).
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