Italian major, Eni SpA’s (E) share price surprisingly fell 0.9% following the news that the company had received three prospection permits from the Algerian state company, Sonatrach.
The permits authorize Eni and Sonatrach to jointly execute prospection activities in the basins of Timimoun and Oued Mya, in onshore southern Algeria. The scope of work comprises studies and drilling of prospection wells to identify the potential of the areas. Eni retains the operatorship of the permits.
The national agency for the exploitation of hydrocarbon resources – Agence Nationale pour la Valorisation des Ressources en Hydrocarbures, ALNAFT – has granted Eni three permits, namely El Guefoul, Tinerkouk and Terfas. These permits are valid for two years and span across 46,837 square kilometers. All the three areas are considered to have immense potential and are thereby important.
The joint operations by Eni and Sonatrach will strengthen the companies’ tie-up and consolidate Eni’s presence in the country. Notably, Eni’s presence in Algeria dates back to 1981. It has interests in 29 exploration and development licenses, which are currently in production, and in 3 permits under development. Eni’s daily equity production of about 125,000 barrels of oil equivalent makes it the leading international producer in the country.
Eni is making constant efforts to expand its upstream operations in Cyprus, Egypt, Vietnam, Indonesia, Pakistan and Kenya. This is expected to go a long way in generating future growth. Moreover, project start-ups, inputs from big projects in Algeria, Iraq, Australia, Russia and Egypt, along with the company’s strategic position in non-conventional gas, are expected to augment volumes going forward.
Eni carries a Zacks Rank #5 (Strong Sell). Better-ranked stocks worth considering in the same sector include Encana Corp (ECA), Magellan Midstream Partners LP (MMP) and Ultra Petroleum Corp. (UPL), both of which sport a Zacks Rank #1 (Strong Buy).
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