Eni Divests 20% Stake In Nour Block To Mubadala Petroleum

Eni SpA (NYSE:E) and Mubadala Petroleum, a wholly-owned subsidiary of Mubadala Investment Company, inked an agreement. The deal is related to the sale of a 20% participating interest of Eni’s share in the Nour North Sinai Offshore concession, Egypt, to Mubadala Petroleum.

Located in the prolific East Nile Delta Basin of the Mediterranean Sea, Nour block is located about 50 kilometers offshore in the Eastern Mediterranean, in water depth of 50-400 meters. It has a span of 739 square kilometers. Currently, the contractors are carrying out the drilling of the exploration well in the first exploration period of the Nour concession.

In the concession, Eni owns 85% stakes and partners with Tharwa Petroleum Company, which holds the remaining stakes of the contractor’s share. The concession also includes the participation of Egyptian Natural Gas Holding Company (EGAS).

The latest agreement further reinforces Eni’s ties with Mubadala Petroleum and strengthens the successful partnership in the Shorouk concession

Eni’s presence in Egypt dates back to 1954, where it operates through the subsidiary IEOC. The company is the main producer in the country and has an equity production of about 340 thousand barrels of oil equivalent per day.

The company’s efforts to expand upstream operations will generate profits in the long term. It expects production growth of hydrocarbon through 2018 of 4%, primarily backed by ramped-up production from fields in Egypt, Indonesia and Kashagan. Moreover, start-up of new upstream projects in Ghana and Angola will continue to boost oil production.

Notably, the decision to spend €3.5 billion through 2021 for exploration and production operations in 25 countries is expected to enable Eni to achieve compound annual production growth rate of 3.5% through 2021 since 2017. Apart from upstream businesses, Eni is planning to achieve growth in refining, marketing and chemical operations. Through 2021, the company projects free cashflow of more than €4.7 billion from downstream activities. The company is also committed to returning cash to shareholders through dividend payments as it intends to increase annual dividend in 2018 by 3.8%

Zacks Rank & Key Picks

Currently, Eni has a Zacks Rank #3 (Hold).

A few better-ranked players in the same sector are Hess Corporation (NYSE:E) , Enterprise Products Partners L.P. (NYSE:EPD) and Energen Corporation (NYSE:EGN) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

New York-based Hess is a global integrated energy company. The company delivered an average positive earnings surprise of 230.5% in the last four quarters.

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.

Headquartered in Birmingham, AL, Energen is a leading oil and natural gas exploration and production company. It pulled off an average positive earnings surprise of 18.6% in the last four quarters.

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