Back to top

Image: Bigstock

Eni to Invest 7 Billion Euro in Italy, Advances With Merakes

Read MoreHide Full Article

Eni S.p.A. (E - Free Report) recently announced its 2018-2021 strategic plans, addressing both its growth policies and environmental concerns. The Italian oil major intends to invest €7 billion ($8.7 billion) in its home country during this period. The company also stated that its development plans for Merakes natural gas field, located offshore Indonesia, have received approval from the Indonesian energy department.

The four-year (2018-2021) strategic plan of Eni includes the usage of €1 billion ($1.2 billion) for reducing the company's carbon footprint. The company's green activities during this period incorporate transformation of around 3 million hectares of its decommissioned territory — located mostly in southern Italy — into solar energy domains. The company also has plans to transform its refineries built in Venice and Gela into "green refineries", which will convert waste into biodiesel. Eni aims to reach a production level of 1 million tons of biodiesel per annum by the year 2021. Moreover, by 2025, Eni intends to reduce its overall emissions intensity from upstream activities by 43% of 2014 figure.

Merakes Approval

Eni has received the government’s approval for the Plan of Development (POD) within three months after the submission of the plan for the Merakes field, located offshore Indonesia near East Kalimantan. The company is currently operating in the deepwater Jangkrik complex gas fields’ prospect in Indonesia.

Per the company, the Merakes field is expected to contain approximately 2 trillion cubic feet (Tcf) of lean gas at 1500 meters water depth. The prolific reservoir is of the Pliocene age. Discovered in 2014, Merakes is situated 35 kilometers southwest from the Jangkrik Floating Production Unit (FPU), which is currently operating in the Jangkrik project. Eni wants to drill six subsea wells in the Merakes field and connect it to the Jangkrik FPU. The company expects the location of Merakes to enable it to attain synergies from the infrastructures located nearby. Eni will use the Bontang LNG facility – currently utilizing for the Jangkrik complex gas project – for processing the gas retrieved from Merakes. Notably, Merakes is Eni's second deepwater development in Indonesia since the Jangkrik project. The company, with 85% stake is the operator in the project, which is expected to come online in the second half of 2020.

Q1 Production

The company stated that production in first-quarter 2018 inched up 4% from its year-ago level of 1.795 million barrels of equivalent (MMBoe), and the trend is anticipated to continue for the whole year. It is marginally lower than the last reported quarter’s figure of 1.892 MMBoe. We would like to remind investors that the increase is higher than the company’s previous guidance of 3% growth in 2018. The surge can be attributed to the recent entry of Eni into the United Arab Emirates.

Price Performance

Eni has gained 25.1% in the past year compared with 18.2% growth of its industry.

Zacks Rank and Stocks to Consider

Eni has a Zacks Rank #3 (Hold). If you are interested in the energy sector, you can opt for better-ranked stocks like CNOOC Limited (CEO - Free Report) , CenterPoint Energy, Inc. (CNP - Free Report) and Oasis Midstream Partners LP (OMP - Free Report) . While CNOOC and CenterPoint sport a Zacks Rank #1 (Strong Buy), Oasis Midstream has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hong Kong-based CNOOC is an integrated energy company. Its revenues for 2018 are anticipated to improve 51.3% year over year, while its bottom line is expected to increase 80.8%.

Houston, TX-based CenterPoint is a public utility holding company. For 2018, the bottom line of the company is likely to be up 13.1%. In the last four reported quarters, the company witnessed a positive average surprise of 11.5%.

Houston, TX-based Oasis Midstream is an integrated energy partnership. Its revenues for 2018 are anticipated to improve 29.3% from the prior-year quarter, while its bottom line is expected to increase 337.2%.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

CenterPoint Energy, Inc. (CNP) - free report >>

CNOOC Limited (CEO) - free report >>

Eni SpA (E) - free report >>

Oasis Midstream Partners LP (OMP) - free report >>