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Eni to Boost Presence in Persian Gulf, Lower Africa Reliance

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To expand asset base in the oil-rich Persian Gulf and reduce its dependence on Africa, Eni SpA (E - Free Report) is reportedly in talks to boost presence in Oman and the United Arab Emirates.

Eni’s presence in the Middle East is very limited. The region is estimated to hold some of the world’s biggest oil and gas reserves. Eni generates more than 50% production from Africa. Per sources, Eni has submitted an expression of interest for a minority stake in state oil group Adnoc’s refinery business. Abu Dhabi has expressed interest to divest 40% of Adnoc’s refining unit at $8 billion. However, the entire stake is unlikely to be sold to one entity. Several parties have expressed interest in Adnoc’s stake including Chinese and Indian firms as well as France’s Total SA (TOT - Free Report) .

In 2017, the company acquired a majority stake in offshore acreage in Oman, which indicates its efforts to expand operations. In 2018, the company strengthened its footprints in Abu Dhabi by purchasing stakes in two oil concessions for $875 million and a portion of the Ghasa gas field from Adnoc.

Eni is also seeking downstream opportunities in the region. In 2017, Adnoc presented a 2030 strategy plan, wherein it proposed to include foreign operators to develop the exploration and production, refining as well as petrochemical industries.

Eni’s massive discoveries at Mozambique’s Mamba and Egypt’s Zohr fields make it one of the strongest contenders. The company’s diversification in refining will give a natural hedge to all the upstream business and enable it to diversify away from Africa.

Per sources, Eni is also striving to participate in Qatar’s plans to develop liquefied natural gas industry. In this regard, it has teamed up with Qatar Petroleum in Mexico as a preliminary move.

Zacks Rank & Other Key Picks

Currently, Eni sports a Zacks Rank #1 (Strong Buy).

A few other top-ranked players in the same sector are Enterprise Products Partners L.P. (EPD - Free Report) and SunCoke Energy, Inc (SXC - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Houston, TX, Enterprise Products Partners is among the leading midstream energy players in North America. It pulled off an average positive earnings surprise of 9.3% in the last four quarters.

SunCoke acquires, owns and operates the coke making and coal mining operations. The company delivered an average positive earnings surprise of 302.6% in the last four quarters.

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Eni SpA (E) - free report >>

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