Eni Australia Ltd − the Australian subsidiary of Italian energy giant Eni SpA ( E - Analyst Report ) − has received a further extension from its project partner MEO Australia to decide on whether to drill a second well in the Heron area of the Timor Sea, off Australia’s Northern Territory.

Per the terms of the NT/P68 farm-in agreement inked in May 2011, Eni would have 60 days following the completion of drilling operations of the Heron South-1 well to decide on whether to drill a second Heron well or withdraw participation in the area.

The well will be drilled on the NT/P68 exploration permit where Eni serves as the operator with a 50% interest, while MEO Australia Limited holds the rest. Eni completed the drilling of Heron South-1 in Dec 2012. Though the well encountered hydrocarbons, it was incapable of flowing at commercial rates in the course of two production tests. As a result, it was plugged and abandoned.

The company had earlier received an extension on the election deadline to Mar 1, which has now been extended to Mar 22. MEO has also stated that it is in talks for considerable delay in order to permit for further evaluation to be completed by the joint venture.

We believe Eni’s constant efforts to expand its upstream operations and such endeavors in the Barents Sea, Angola, Indonesia and Australia will go a long way to generate future growth.

With the global economy expected to step up and production ramp-up in the existing fields of Libya, we believe that Eni offers ample long-term visibility into profitability over the coming quarters.

Eni holds a Zacks Rank #4, which is equivalent to a short-term Sell rating. However, there are other stocks in the oil and gas sector – Enerplus Corporation ( ERF - Snapshot Report ) , Range Resources Corporation ( RRC - Analyst Report ) and NGL Energy Partners LP ( NGL - Snapshot Report ) – which hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.