Italy’s biggest oil and gas company Eni Spa ( E - Analyst Report ) entered into a Heads of Agreement (HOA) with US-based Anadarko Petroleum Corporation ( APC - Analyst Report ) for the development of natural gas reservoirs in offshore Mozambique.

Both the companies will carry out separate but coordinated offshore activities in Area 4 and Area 1. While Area 4 is operated by Eni, Area 1 is operated by Anadarko.

Anadarko has a 36.5% participating interest in Area 1 and its other partners are Japan's Mitsui, India's BPRL Ventures and Videocon, Thailand's PTT and Mozambique's Empresa Nacional de Hidrocarbonetos (ENH). Eni has a 70% participating interest in Area 4, with Galp Energia, South Korea's KOGAS and ENH having 10% each.

Jointly, Eni and Anadarko also planned to build a common onshore LNG liquefaction facility in the Cabo Delgado Province of northern Mozambique. The facility is expected to be in operation by 2018 and expand to a 10-train 50 million tons per annum (mtpa) export facility.

Based in Rome, Italy, Eni Spa with its consolidated subsidiaries is engaged in oil and gas, electricity generation, petrochemicals, oilfield services and engineering industries. The company’s major business segments are Exploration and Production (E&P), Gas and Power, and Refining and Marketing.

Anadarko primarily operates through three business segments: Oil & Gas Exploration & Production, Midstream and Marketing. The Oil & Gas Exploration & Production segment explores and produces natural gas, crude oil, condensate and NGLs. This division accounts for the lion’s share of Anadarko’s revenues and earnings.

Both, Eni and Anadarko hold 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 on the stocks.