Eni SpA
(
E
) has made a major gas discovery onshore Pakistan north of its
Badhra fields. The find is expected to hold 300 billion cubic feet
(Bcf) to 400 Bcf of gas.
About 217 miles north of Karachi, this latest find is situated in
the Badhra Area B exploration concession, in the Khirtar Fold Belt
region. Drilled at a total depth of 8,038 feet, the exploratory
well - Badhra B North-1 - has encountered more than 54 meters of
net gas pay in two thick cretaceous sandstones of the Mughal Kot
Formation.
The extracted sample from the well confirmed better-quality gas and
produced 25 million standard cubic feet per day (MMscf/d) and 35
MMscf/d of gas from the two reservoirs during the production test.
Eni operates the Badhra B block with a 40% interest in the
development phase, while its associate partners, U.K.'s Premier Oil
Plc, Kufpec Pakistan Limited and Pakistan's Oil & Gas
Development Company Limited own 6%, 34% and 20% stakes,
respectively.
The discovery lies 12 miles east of the Italian major's Bhit gas
processing facility, which deals with the gas production from the
Bhit and Badhra fields. Eni confirmed that this drilling operation
was part of its strategy to refocus on exploration activities in
areas adjoining productive fields in Pakistan. The company also
added that major prospective finds could yield new pay on new
geological models.
Eni has been operational in Pakistan since 2000. Last year, Eni's
equity production in the country averaged approximately 54,800
barrels of oil equivalent per day. The company is already in talks
with regulators and project partners to hasten production through a
long-term production test for the commercialization of the gas.
We believe Eni's constant efforts to expand its upstream operations
will go a long way to generate profitable growth in the future.
Recently, Eni signed a sale and purchase agreement with the U.S.
super major
Chevron
Corporation
(
CVX
) for 25% farm-in to three exploration blocks - LB 11, LB 12 and LB
14 - offshore Liberia. The blocks are assumed to be similar to that
of Deep Cretaceous discoveries elsewhere in the West African
Transform Margin such as Mozambique, Ghana and Suriname. The deal
indicates a new market for Eni and will assist the company to
further explore the West Africa Transform Margin.
However, the weak natural gas scenario worldwide, arising out of
continued oversupply and low demand could hurt the company's
performance in the near term. Eni currently holds a Zacks #4 Rank,
which translates into a Sell rating for the period of one to three
months. Our long-term Neutral recommendation on the company remains
unchanged at this stage.
CHEVRON CORP (CVX): Free Stock Analysis Report
ENI SPA-ADR (E): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research