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BP to Purchase 10% Stake in Shorouk Concession from Eni

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BP plc (BP - Free Report) recently announced its decision to acquire 10% stake from Eni SpA’s (E - Free Report) in the Shorouk concession, offshore Egypt, for a total consideration of $375 million.

The Shorouk concession offshore Egypt also contains the super-giant Zohr gas field. On completion, BP will compensate Eni for BP’s share of past expenditure.

Per the agreement, BP has an option to buy another 5% interest in the concession under the same terms, before the next year ends.

Discovered by Eni in Aug 2015, the Zohr field is located in the Mediterranean Sea, about 190 kilometers north of Port Said in water depth of about 1,500 meters. To date, six wells have been drilled successfully. It is considered to be the largest gas discovery in the Mediterranean. Eni estimates the Zohr field to hold total gas resources of about 30 trillion cubic feet of gas in place. The first phase of development of Zohr is being sped up and first gas is anticipated in late 2017.

Eni, the operator in the Shorouk concession, currently has a stake of 100%. Subject to approvals from the relevant Egyptian government authorities, BP is anticipated to complete the purchase in the second quarter of 2017.

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BP’s operations in Egypt dates back to over five decades. The company’s total investments of about $30 billion make it one of the largest foreign investors in the country.

In recent years, BP has made a string of discoveries in Egypt, including Taurt North, Seth South and Salmon and Rahamat, Satis, Hodoa, Notus, Salamat and Atoll. In Jun 2016, BP approved the fast-track development of the Atoll Phase One project, scheduled to come online in 2018.

BP currently has a Zacks Rank #3 (Hold). Some better-ranked players in the same sector include SunCoke Energy Inc. (SXC - Free Report) and Futurefuel Corp. . Both these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SunCoke Energy posted a positive earnings surprise of 177.78% in the last reported quarter. It reported a positive earnings surprise in three of the four preceding quarters.

Futurefuel Corp. posted a positive earnings surprise of 20.83% in the last reported quarter. It reported a positive earnings surprise in all of the four preceding quarters.

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