Eni's New Gas Find in Norway

Italian energy giant Eni SpA ( E - Analyst Report ) has come across a gas-condensate find in PL 533 in the Barents Sea, off Norway.

Situated on the west flank of the Loppa High in the Barents Sea, the exploration well – 7220/10-1 - encountered two gas columns in sandstones of Cretaceous and Jurassic age.

The primary target in the Knurr formation struck a gross gas condensate column of 38 meter, while the secondary target in the Sto formation hit a gross gas condensate column of 54 meter.

The reservoir is considered to be of good quality according to the data collected from the well, including coring, wireline logging and fluid sampling. Per the initial estimates of the Norwegian Petroleum Directorate (NPD), the find is expected to contain recoverable oil equivalent reserves of 29 million to 41 million barrels.

Prior to drilling, license partner Lundin Petroleum AB had projected the Salina structure to contain unrisked gross resource potential of 70 million to 500 million barrels.

The Salina structure, located about 50 kilometers north-west of the Snohvit gas field, in a water depth of 348 meters, was drilled using the semi-submersible drilling rig Scarabeo 8 in August, to reach a total depth of 2371 meters.

The rig is now expected to advance to PL 229, in the Barents Sea, to commence drilling operations on the Goliat field.

Eni, the operator of PL 533, has a stake of 40%. The other partners - Lundin, Det Norske and RWE Dea – each have a 20% interest, respectively.

Eni, which recently inked a sale and purchase agreement with the U.S. super major Chevron Corporation ( CVX - Analyst Report ) for 25% farm-in to three exploration blocks, LB 11, LB 12 and LB 14, offshore Liberia - carries a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. Longer term, we maintain our Neutral recommendation.