Eni Hits Gas Again in Mozambique

Italian energy company Eni SpA ( E - Analyst Report ) has made two major natural gas discoveries in the Mamba Complex, in Area 4, offshore Mozambique – representing the third find in 2012, with the likelihood of more such to come in coming months.

The delineation wells – Mamba South 2 and Coral 2 - represent the sixth and seventh wells that have been drilled consecutively and have added about 6 trillion cubic feet (Tcf) of gas in place to Area 4. With these new discoveries, Area 4 now has 68 Tcf proven gas in place, with potential of around 23 Tcf plus.

The full potential of Mamba Complex is expected to be appraised through the upcoming delineation wells, while the initial estimations show 75 Tcf of gas in place.

Located about 9 kilometers east of Mamba South 1 and about 50 kilometers off the Capo Delgado coast – Mamba South 2 – was drilled in 1,918 meters of water and touched a total depth of 4,300 meters. The well hit 60 meters of gas pay in high quality Oligocene reservoirs and the discovery confirmed the presence of hydraulic communication with the same reservoir of Mamba South 1. The flow tests showed stellar results and guided a production rate of 140 million standard cubic feet per day.

Located around 15 kilometers northwest of Coral 1 and around 50 kilometers off the Capo Delgado coast – Coral 2 - was drilled in 1,950 meters of water and touched a total depth of 4,725 meters. Eni proposes to conduct a production test in the Coral 2 find, where it came across 140 meters of gas pay in good quality Eocene reservoirs. The discovery established the presence of hydraulic communication with the same reservoir of Coral 1.

Eni, the operator of Area 4, holds a 70% participating interest. Each of the other partners – Portugal’s Galp Energia, Korea’s KOGAS and Mozambique's ENH – hold a 10% stake.

With the intention of evaluating the full potential of the Mamba Complex finds, Eni proposes to drill at least two more wells – Coral 3 and Mamba South 3 – in a row. Mozambique has gained immense attention by various oil giants following several gas field discoveries by Eni and U.S. explorer Anadarko Petroleum Corporation ( APC - Analyst Report ) .

Eni holds a Zacks #3 Rank that is equivalent to a Hold rating for a period of one to three months. Longer term, we maintain our Neutral recommendation.