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Italian explorer Eni SpA (E - Analyst Report) has yet again made a high-impact gas discovery at Agulha exploration prospect, in Area 4, offshore Mozambique. This represents the tenth continuous well to be drilled in the block, where Eni, the operator, maintains its 100% exploration success rate.

Initial estimates reveal that the Agulha structure might hold about 5–7 trillion cubic feet of gas in place. Eni along with its other joint venture partners of Area 4 is evaluating the results of the find to decide on its appraisal strategy.

Located in the southern part of area 4, about 80 kilometers off the Cabo Delgado coast, the exploration well, Agulha, was drilled to a total depth of 6,203 meters in water depth of 2,492 meters. The well struck around 160 meters of wet gas pay in good quality Paleocene and Cretaceous reservoirs.

The primary aim of drilling the Agulha well was to evaluate new exploration targets and examine the hydrocarbon potential of geological sequences, which are older than the ones drilled in the Mamba complex.

The discovery of Agulha well in the southern part of Area 4 has unlocked a new exploration play, where the drilling of three more wells is anticipated in 2014.

Eni, holds a 50% indirect interest, after farming out a 20% stake to China National Petroleum Corporation. The other partners include Galp Energia, Kogas and Mozambique’s state-owned Empresa Nacional de Hidrocarbonetos each holding 10%.

Earlier, Eni had decided to jointly develop Area 4 with Anadarko Petroleum Corp.’s (APC - Analyst Report) neighboring Area 1 field in a liquefied natural gas project. The final investment decision is expected in 2014, with first LNG cargoes in 2018.

Eni carries a Zacks Rank #4 (Sell). However, not all sector stocks are performing as poorly. Zacks Ranked #1 (Strong Buy) China Petroleum & Chemical Corp (SNP - Analyst Report) and Dril-Quip, Inc. (DRQ - Analyst Report) appear attractive for the short term.

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