Eni SPA ( E Quick Quote E - Free Report) entered an agreement to divest its Nigeria-based subsidiary, Nigerian Agip Oil Company (“NAOC”), to local energy solutions provider Oando.
NAOC plays a leading role in the Nigerian energy sector, with a primary focus on onshore oil and gas operations, and power generation. NAOC has participating interests in four onshore blocks and two onshore exploration leases, and runs two power facilities in Nigeria.
The transaction excludes NAOC’s interest in Shell Production Development Company. Eni will hold on to its 5% stake in the joint venture, indicating that the latest move does not imply a complete departure from the Nigeria energy sector. With the divestment, Eni gets closer to its long-term strategy to reduce oil exposure in favor of natural gas.
The acquisition will double Oando’s reserves to 996 million barrels of oil equivalent. The synergies created will unlock exceptional opportunities for Oando to realign expectations, enhance efficiency, optimize resource allocation and significantly increase production.
The acquisition aligns with Oando’s strategy to acquire, enhance, appraise and efficiently develop reserves. It highlights the important roles that indigenous actors will play in the future of the Nigeria upstream sector.
International oil majors are seeking to divest their onshore assets in Nigeria due to oil theft from pipelines and more focused exploration budgets. However, Eni will continue to operate in the country, focusing on offshore operations.
Shares of Eni have outperformed the
industry in the past three months. The stock has gained 12.4% compared with the industry’s 7% growth.
Image Source: Zacks Investment Research Zacks Rank & Stocks to Consider
Eni currently carries a Zack Rank #3 (Hold).
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