Italy's integrated energy company
) plans to boost its capital spending in Indonesia for 2013 as it
aims to drill more wells. The company intends to invest
approximately $1.2 billion next year in Indonesia, up from the
targeted $400 million for this year.
ENI SPA-ADR (E): Free Stock Analysis Report
STATOIL ASA-ADR (STO): Free Stock Analysis
To read this article on Zacks.com click here.
In May, Eni was awarded a 100% participating interest in the East
Sepinggan block at the first Indonesian International Bid Round in
2012. Located around 170 kilometers southeast of the Bontang LNG
processing facility offshore East Kalimantan, the block spreads
over 2,913 square kilometers in the Kutei Basin - a hydrocarbon
rich region where numerous giant discoveries are currently in
The company is engaged in expanding its exploration foray in the
rapidly growing Far East oil and gas market. This award follows
Eni's contracts for the North Ganal block in Kutei Basin and Arguni
I block in Bintuni Basin in the country in November last year. Eni
is also the operator of the North Ganal block. Eni's areas of
operations include the Muara Bakau, Bukat, Arguni, Krueng Mane and
West Timor blocks.
We believe Eni's constant efforts to expand its upstream operations
and such endeavors in Barents Sea, Angola, Indonesia and Australia
will go a long way in generating profitable growth in the future.
Although Eni has been experiencing declining production volumes
over the last few quarters, management remains upbeat about its
long-term upstream delivery potential with its discovery of new
Eni's outlook for the upcoming months looks favorable, given its
2012-2015 strategic plans to optimize the production cycles, while
reducing costs and utilizing its proprietary technology. The
company remains upbeat on its production growth target, expecting
it to increase more than 3% annually in the said period from the
previous 2% until 2021.
However, we are concerned about Eni's refining business as its
underlying fundamentals are still weak following political
disturbances in the Middle East, which could suppress production.
Hence, we expect the company to perform in line with its peers,
), and the industry as a whole, and rate the stock Neutral.
The company retains a Zacks #3 Rank, which is equivalent to a
short-term Hold rating.