As per market sources, two European energy big-shots BP plc (BP) and Royal Dutch Shell plc (RDS.A) are contending to take over a 20% stake in Mozambique gas field owned by Eni SpA (E). Another oil giant, Total SA (TOT) is also in the race for the acquisition.
Apart from buying the interests in the gas project for approximately $4 billion or 2.5 billion British pounds, the purchasing company will also assist in funding exploration activities in the filed.
Italian company Eni controls a 70% interest in the concession and acts as the operator of the holding that is termed as the largest gas discovery for the company. The remaining interests are equally shared by Portuguese oil and gas company Galp Energia, Korea Gas Corp. or KOGAS, and Mozambique state-owned ENH.
In October 2011, Eni announced the discovery of gas in offshore Rovuma Basin. The company drilled the Mamba South 1 well, located 24.8 miles off Cabo Delgado coast, to a water depth of 5,200.1 feet. The well is estimated to hold a total of 695.5 feet of continuous gas pay in high-quality Oligocene sands.
Eni, in mid-February 2012, announced the discovery of Mamba North 1 well that was drilled to a depth of 5,330 meters. This well stuck a total of 610.2 feet of gas pay in multiple high-quality Oligocene and Paleocene sands.
The company intends to conduct further evaluation and analysis through the drilling of five more wells in the adjoining acreage to determine the overall potential of the Mamba Compex.
Eni stated that the Mozambique gas find counts as a major success for the company and has paved the way for more lucrative opportunities in the near future. The Rovuma Basin boasts as a natural gas rich region, and development of the area would benefit the upcoming Asian gas markets.
We are maintaining our Neutral recommendation on Eni, based on its impressive overseas endeavors, various projects and advanced technology developments. These positives are somewhat clouded by the dull gas market fundamentals and operational disturbances.
Eni currently holds a Zacks #3 Rank, which translates into a Hold rating.
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