Eni Spuds First Well in Sankofa East

Italian oil major Eni SpA ( E - Analyst Report ) has successfully drilled the first appraisal well – Sankofa East 2A – of the Sankofa East oil discovery in the Offshore Cape Three Points (OCTP) block.

Spud 8 kilometers southwest of the discovery well Sankofa East XI, the new well substantiates the extension of the oil accumulation in the Cenomanian sequence. Located in the Tano Basin offshore Ghana, about 50 kilometers off the coast of Ghana, the appraisal well – Sankofa East 2A – was spud to a total depth of 4,050 meters in water depth of 990 meters.

The well hit upon 23 meters of gas and condensate gross pay (17 meters net), and 76 meters of gross oil pay (32 meters net) in good sands of cretaceous age. Eni has projected the total potential of the find at about 450 million barrels of oil in place with recoverable resources of about 150 million barrels.

The outcome of the well’s appraisal is significant as it validates the commerciality of the OTCP block and acknowledges the feasibility for further industrial and economic development in the country. The data acquisition also confirms the hydraulic communication in the oil prone reservoir between the discovery and the appraisal well.

Eni, through its subsidiary Eni Ghana Exploration and Production Limited, operates the OCTP block with a stake of 47.22%. Vitol Upstream Ghana Limited and state company GNPC have an interest of 37.78% and 15%, respectively. Further, GNPC holds an option to increase its holding by about 5%.

Eni’s presence in Sub Saharan Africa dates back to 1960s. Currently, the company operates two exploration offshore blocks – OCTP and Keta – with yield of about 450,000 barrels of oil equivalent per day.

Last month, Eni entered into a Heads of Agreement with US-based Anadarko Petroleum Corporation ( APC - Analyst Report ) for the development of natural gas reservoirs in offshore Mozambique.

Eni holds a Zacks Rank #4 (short-term Sell rating). Longer term, we maintain our Neutral recommendation.