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Italian energy giant Eni SpA (E - Analyst Report) has inked a $4.21 billion deal with China National Petroleum Corporation (CNPC) for divesting a stake of about 20% in Area 4, offshore Mozambique.

CNPC farmed into the prospect by purchasing 28.57% of the shares of Eni East Africa, which holds 70% in Area 4. Other partners in the license are Empresa Nacional de Hidrocarbonetos de Mocambique (ENH), Korea’s Kogas and Portugal’s Galp Energia. Each hold a 10% interest.

The transaction is based on the execution of certain standard conditions, including attaining all essential approvals from Mozambique authorities.

As per reports released earlier this month, the two companies have been discussing the stake deal for the past six months. CNPC’s entry into Area 4 is strategically vital for the project mainly due to its worldwide importance in the upstream and downstream sectors.

Both the companies have also inked a Joint Study Agreement for the development of the Rongchang shale gas block. Located in the Sichuan Basin, the approximately 2,000 square kilometer Rongchang shale gas block has the highest potential, based on the production tests conducted so far.

The license is situated in a region, which is in close proximity to the key gas consuming markets in China and has been de-risked by research activities. The contract will facilitate inspection of the region as well as negotiations for the Production Sharing Agreement.

Eni holds a Zacks Rank #4 (short-term Sell rating). However, there are other stocks in the energy sector, namely, Enerplus Corporation (ERF - Snapshot Report) , Range Resources Corporation (RRC - Analyst Report) and EPL Oil & Gas, Inc. , which carry a Zacks Rank #1 (Strong Buy) and are expected to perform impressively over the next few months.

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