Italian oil giant Eni S.p.A. (E - Free Report) has been ordered by the offshore safety watchdog of Norway, Petroleum Safety Authority ("PSA") to halt production on the company's Goliat Floating Production Storage and Offloading ("FPSO") vessel owing to some insufficiencies and faults.
Eni operates in the Goliat field, which is located in PL 229 in the Barents Sea and contains around 180 million barrels of oil reserve. It is 80 kilometers north-west of Hammerfest in Northern Norway. Production in the Goliat field, about 100,000 barrels of oil per day, began in March 2016. Eni has 65% operating interest in the field, while Statoil ASA has the rest 35% interest. Toward the end of September, PSA carried an audit of electrical safety on the FPSO, following which a meeting was held between Eni and the watchdog in early October. The fault rates found in the equipment were high, which led to an emergency shutdown. Per the company, the fault rate on the equipment was reduced to 38% through repairs after the audit report came out. The condition of the Ex motors relevant to the FPSO is yet to be determined.
Per the notice served to Eni, the company has to commence a complete systematic survey of potential ignition sources in the Ex motors. Operational, technical and organizational measures have to be taken by the company to decrease the threats from the FPSO, after which the PSA has to be informed. Production will start after that.
Based in Rome, Eni with its consolidated subsidiaries is engaged in oil and gas, electricity generation, petrochemicals, oilfield services and engineering industries. The company’s major business segments are Exploration and Production (E&P), Gas and Power, and Refining and Marketing. The company conducts its major exploration and production activities for hydrocarbons.
We believe that Eni’s constant efforts to expand its upstream operations in Cyprus, Egypt, Vietnam, Indonesia, Pakistan and Kenya will go a long way in generating profitable growth in the future. However, the company expects weak trading environment for its Gas and Power business, which will adversely impact its profitability.
Eni has gained 1.1% year to date compared with 0.2% growth of its industry.
Zacks Rank and Stocks to Consider
Eni currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the oil and energy sector are Lonestar Resources US Inc. (LONE - Free Report) and First Solar, Inc. (FSLR - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lonestar Resources’ sales for 2017 are expected to surge 60.2% year over year. The company delivered a positive earnings surprise of 62.5% in the second quarter of 2017.
First Solar’s sales for the third quarter of 2017 are expected to rally 16.1% year over year. The company delivered a positive average earnings surprise of 524.2% in the last four quarters.
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