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The Norwegian unit of Italian energy giant Eni SpA (E - Analyst Report) − Eni Norge AS − has finally received approval from the Norwegian authorities for the start-up of its drilling operation in the much awaited Goliat oilfield in the Barents Sea.

The company said that it intends to start the drilling program this month for the estimated 50-day probe in production license 229. The appraisal well − 7122/7-6 − is the first in the venture and the Saipem semi-submersible rig Scarabeo 8 will perform the drilling operation.

Under the five-year, $840 million worth contract, this campaign includes the drilling of the additional 22 development wells apart from the appraisal well. The development well drilling is intended to start in November and will likely take three-and-a-half years.

The drilling campaign of the filed is already running three years behind schedule due to construction delays related to the field’s production unit at South Korean yard Hyundai Heavy Industries. Hence, the start-up of Goliat field, Norway’s first operating oilfield in the Barents Sea, was extended to the third quarter of 2014 from the earlier target of late 2013.

Owing to the delays and other manufacturing alterations on the floater, along with elevated equipment prices and longer lead times on deliveries, the cost of the project spiraled by 20% to $6.5 billion.

The field was awarded to Eni n the 'Barents Sea Round' in 1997 and hit its first oil in 2000. Eni operates the field with a 65% stake, while the state-run company Statoil ASA (STO - Analyst Report) enjoys the remaining 35% interest.

Apart from Statoil, Eni is one of the main operators on the Norwegian continental shelf since 1965. The company is well-established in all the three core areas on the shelf, i.e. the North Sea, the Norwegian Sea and the Barents Sea.

Eni retains a Zacks #3 Rank, which is equivalent to a short-term Hold rating. We also maintain our Neutral recommendation for the company.

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