Italian energy giant
) share price dropped 0.9% on the day it announced an agreement
to farm out its 60% stake in Arctic Russia to Yamal Development -
a 50:50 joint venture between Novatek and GazpromNeft. However,
the stock price moved up 0.1% and 0.5% in the next two trading
sessions to close at $48.67 on Nov 22.
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Per this deal signed in Moscow, Eni will divest its stake in
Arctic Russia, which owns 49% of Severenergia. The Russian oil
and gas company holds four licenses for the exploration and
production of hydrocarbons in the region of Yamal Nenets. The
yield from these licenses is anticipated at about 36 billion
cubic meters of gas and liquids through 2017.
Eni will raise cash proceeds of $2.94 billion from the sale. The
transaction is subject to receipt of necessary approvals. Upon
closure of the transaction, Eni will not have any stake in
Severenergia, while Yamal Development's share in SeverEnergia
will rise to 80.4%.
With this sale, Eni has exited from the upstream assets of
Siberia that had matured considerably. The sale is in sync with
its strategy of creating value for its shareholders.
Eni's exit from Arctic Russia has not severed its relation with
Russia. The company still remains the biggest buyer of natural
gas from Gazprom and a major buyer of oil from Rosneft.
Eni and Rosneft are also joint venture partners relating to
exploration of promising assets in the Black Sea and the Barents
Sea. Moreover, Eni partners Gazprom in the South Stream project
which, once completed, will deliver 63 billion cubic meters of
gas annually, contributing substantially to the European security
Eni carries a Zacks Rank #3 (Hold). However, there are other
sector stocks -
SM Energy Company
Abraxas Petroleum Corp.
Western Gas Partners LP
) - that hold a Zacks Rank #1 (Strong Buy) and are worth buying