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Eni (E) to Divest 10% in the Shorouk Concession for $934M

Zacks

Eni SpA E has agreed to divest 10% of its stake in the Shorouk concession, offshore Egypt, to a wholly owned subsidiary of Mubadala Investment Company, Mubadala Petroleum. Eni will generate about $934 million from this sale.

Eni currently holds 60% stake in the Shorouk concession through its subsidiary, IEOC. Other partners are Rosneft and BP plc BP with the respective 30% and 10% interests in the concession. The transaction’s closure is subject to fulfillment of certain standard conditions including all essential authorizations from Egyptian authorities.

The super-giant gas field of Zohr is also located at the Shorouk concession, producing 400 million standard cubic feet per day. It was brought online in December 2017 within 28 months after its discovery. The yield from Zohr is expected to eventually reach the plateau by the end of 2019. In 2018, Zohr is likely to add 70,000 barrels of oil equivalent per day for Eni.

The deal is in line with Eni’s dual exploration strategy, via which, the company seeks to farm out stakes in the fields it operates so as to raise cash for financing future development as well as meting out dividends.

Eni’s presence in Egypt dates back to 1954. It operates in the region through its IEOC Production BV unit. The company is a key producer in the country with equity production of about 230,000 barrels of oil equivalent per day.

About Eni

Eni with its consolidated subsidiaries is engaged in oil and gas, electricity generation, petrochemicals, oilfield services and engineering industries. The company’s major business segments are Exploration and Production, Gas and Power, and Refining and Marketing. The company conducts its major exploration and production activities for hydrocarbons.

About Mubadala Petroleum

Mubadala Petroleum is completely owned by Abu Dhabi-based state fund, Mubadala Investment Company with has assets worth above $125 billion.

Price Performance

Eni’s shares have gained 2.8% in the last three months against the industry’s 2.7% decline.

Zacks Rank & Key Picks

Eni carries a Zacks Rank #3 (Hold). Two better-ranked players in the same sector are Pioneer Natural Resources Company PXD and ConocoPhillips COP, each stock sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered at Irving, TX, Pioneer Natural Resources Company is an independent oil and gas exploration and production entity. It pulled off an average beat of 66.92% in the trailing four quarters.

ConocoPhillips, based in Houston, TX, is a major global exploration and production (E&P) company. It came up with a positive surprise of 144.45% in the last four quarters.

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