Eni Expands Egyptian Presence - Analyst Blog

By Zacks | February 11, 2013 AAA

Italian energy major Eni SpA E) has made a new oil discovery with an exploration well - Rosa North IX. The well is located in the Meleiha Concession in Egypt's Western Desert.

The Rosa North IX probe came across 80 meters in multiple good-quality sandstones of the Bahariya, Alam El Bueib, Khatatba and Ras Qattara reservoirs. It flowed 43°- 48° API oil at superior rates during reservoir testing.

The progress plan of the find includes spudding of two development wells in 2013, and the yield from each well is anticipated at 2,000 barrels of oil per day (Bopd). The production from the field is likely to touch 5,000 Bopd within a year from its coming online. The output will be supplied to the nearby processing facilities of Meleiha field.

The new discovery comes close on the heels of the Emry Deep field find in May 2012. Only 7 months after its commencement, Emry Deep now generates 18,000 barrels of oil equivalent per day.

These finds validate the prospects of the Meleiha Concession and the untapped potential disclosed by the freshly obtained 3D seismic survey and new geological models resulting from it.

Eni has a 56% working interest in the Meleiha Concession through its affiliate International Egyptian Oil Company (IEOC). Other partners are Lukoil and Mitsui holding 24% and 20% interests, respectively. Agiba, the operator of the Rosa North project, is a joint operating company owned by IEOC, Mitsui and Egyptian General Petroleum Corporation (EGPC), holding 40%, 10% and 50%, respectively.

The drilling expedition in the Rosa North IX is in sync with Eni's plan to realign exploration activities in Egypt by aiming for deeper oil plays in the Western Desert. The company is also concentrating on the fast track development of conventional and synergic oil assets.

Eni holds a Zacks Rank #4, which is equivalent to a Sell rating. However, other stocks in the oil and gas sector like Breitburn Energy Partners LP (BBEP), Penn Virginia Corporation (PVA) and Memorial Production Partners LP (MEMP) hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.

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