Italy's leading energy company by market value,
) has signed a Completion Deed with Russian state-owned oil
ENI SPA-ADR (E): Free Stock Analysis Report
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The pact relates to the joint development for exploration
activities in the Fedynsky block and Central Barents block in
Russian Barents Sea as well as Western Chernomorsky block in the
Black Sea. These three blocks are estimated to hold total
recoverable resources of 36 billion barrels of oil equivalent.
The projects are part of the wider cooperation between Eni and
Rosneft, approved under the Strategic Cooperation Agreement
entered into by the parties on Apr 25, 2012. These agreements
also entail the joint development of the Russian offshore blocks,
technological and staff exchange as well as Rosneft's involvement
in Eni's international projects.
Three joint venture companies were formed by Eni and Rosneft to
operate the Russian offshore projects. Rosneft will have a stake
of 66.67% in these joint ventures, while Eni (with a stake of
33.33%) will bear the total cost of oil and gas exploration
activities, per the conditions provided in the existing
agreements. Moreover, Eni will reimburse Rosneft for one third of
the expenses on the acquisition of licenses.
Spread over 38,000 square kilometers in the ice-free southern
part of the Barents Sea, water depth at the Fedynsky block ranges
from 200 meters to 320 meters. In conformity with the license
conditions, 6,500 kilometers of 2D seismic needs to be completed
at the Fedynsky block prior to 2017 and 1,000 square kilometers
of 3D seismic by 2018. One exploration well should be drilled
before 2020 and, if successful, another exploration well will be
drilled within 5 years.
The Central Barents block connecting Fedynsky to the North, has a
water depth of 160-300 meters. It is essential to carry out 2D
seismic in 3,200 kilometers by 2016 and 3D seismic in 1,000
kilometers by 2018. The first exploration well is to be spud by
Jan 2021, and upon succeeding, another exploration well is to be
drilled in 5 years.
The third area to be jointly explored is the Western Chernomorsky
block in the Black Sea. The block spans 8,600 square kilometers
with water depth varying from 600-2,250 meters. Rosneft has
performed seismic works to evaluate the area in its entirety and
recognized 6 promising leads with high potential. In line with
license obligations, two exploration wells are to be spud in the
2015-2016 time frame.
Eni carries a Zacks Rank #3 (Hold). However, there are other
Zacks Ranked #1 (Strong Buy) stocks -
Hornbech Offshore Services, Inc.
Newpark Resources Inc.
Gulfmark Offshore, Inc.
) - that are expected to perform impressively over the short