Eni SpA (E - Free Report) has struck a major gas discovery at the Coral 1 exploration prospect offshore northern Mozambique.
The Coral 1 well − drilled to a total depth of 4869 meters in 2261 meters of water − hit 75 meters of gas pay in single high-quality Eocene sand. This prospect is located 65 kilometers off Capo Delgado in the southern part of Area 4 and 26 kilometers southeast of Eni’s Mamba South-1 find.
The Coral prospect − exclusively located in Area 4 − is estimated to hold between 7 trillion and 10 trillion cubic feet (Tcf) of gas reserve. Hence, this takes the resources of Area 4 to range between 15 Tcf and 20 Tcf of gas. Importantly, the Coral 1 discovery boosted the overall potential of Area 4 Offshore Rovuma to range between 47 Tcf and 52 Tcf of gas in place.
The Italian energy giant highlighted that this discovery holds immense value as it substantiates a new exploration play that is expected to be independent from those drilled so far in earlier Mamba wells. Hence, Eni intends to run a production test on the Coral 1 find and anticipates at least five additional wells that will prove the resource potential of Area 4.
Eni owns 70% participating interest in Area 4, with associate partners Galp Energia and Korea Gas Corp. holding 10% each, and Mozambique’s state ENH holds 10% carried through the exploration phase.
We believe Eni’s constant efforts to expand its upstream operations and endeavors in Barents Sea, Angola, Indonesia and Australia will go a long way to generate profitable growth in the future. Moreover, project start-ups, inputs from big projects including Junin 5 and Perla in Venezuela, potential exploration scenario in Togo, Ghana, Democratic Republic of Congo and Mozambique, as well as the strategic position in non-conventional gas are expected to augment volumes going forward.
Eni, which competes with Statoil ASA , currently holds a Zacks #3 Rank, which translates into a Hold rating. Our long-term Neutral recommendation on the company remains unchanged at this stage.