Eni Fortifies Position In Kazakhstan With Strategic Tie-Ups

Eni SpA (NYSE:E) has inked an agreement with JSC KazMunayGas (“KMG”) at the Foreign Investors’ Council in Astana. The agreement consists of the renewal of the conditions for the transfer to Eni of 50% of the subsoil use rights in the Isatay block, for exploration and production of hydrocarbons.

Located in the Caspian Sea, the Isatay block is anticipated to hold considerable amount of hydrocarbon resources. The block will be operated by a Joint Operating Company (JOC) formed by Eni and KMG.

The JOC will gain from the proprietary technologies of Eni, which is a global leader in terms of exploration. The company has widespread experience in operating difficult technical and environmental areas such as the Caspian Basin. Subject to the approval of the transaction by the Republic of Kazakhstan, the JOC will commence operations as soon as the transfer of 50% interest in the license is concluded.

Additionally, Eni and KazMunayGas EP, a subsidiary of KMG, have inked an agreement to further increase upstream technology co-operation and assess potential joint developments in new projects. The agreement also comprises of a technical and managerial training program for KMG EP staff.

Recently, Eni inked a cooperation agreement with General Electric (NYSE:GE) and the Minister of Energy of Kazakhstan, Kanat Bozumbayev, to encourage the development of renewable energy projects in the country.

Per the agreement, Eni and GE will work together with an aim of assessing the possibility of constructing a wind power plant with a capacity of about 50 megawatt and recognizing future initiatives that will contribute to realizing the country's strategic goals in terms of sustainable development.

Together with the Ministry of Energy of the Republic of Kazakhstan, JSC KazMunayGas (KMG) and the Kazakh Committee of geology and subsoil use, Eni inked a Memorandum of Understanding (MoU) to evaluate future cooperation terms in the Kazakh-Russian Pre-Caspian Basin. This basin is estimated to hold several discoveries of oil fields of significant size. The signing of this MoU is part of the Eurasia project supported by the Ministry of Energy to facilitate study of the depth exploration potential of the basin.

All the agreements inked at the Foreign Investors’ Council further increase the scope of Eni's activities in Kazakhstan and strengthen its presence in the country. It also consolidates the strategic alliance with key partners such as KMG in the upstream sector and GE in the field of renewable energy.

Besides being an equity partner in various projects in the Northern Caspian Sea, including the giant Kashagan field, in Kazakhstan, Eni is joint operator of the Karachaganak field.

Eni’s price chart is unimpressive. Shares of the company lost 6.5% in the last three months, while the Zacks categorized Oil & Gas – International Integrated industry declined 2.5% in the same time span.

Eni currently has a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space include SunCoke Energy, Inc. (NYSE:SXC) , Enbridge Energy, L.P. (NYSE:EEP) and Canadian Natural Resources Limited Ltd. (TO:CNQ) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SunCoke Energy delivered a positive earnings surprise of 120.0% in the preceding quarter. The company beat estimates in two of the four trailing quarters with an average negative earnings surprise of 35.78%.

Enbridge Energy delivered a positive earnings surprise of 128.57% in the preceding quarter. The company beat estimates in three of the four trailing quarters with an average positive earnings surprise of 38.22%.

Canadian Natural Resources delivered a positive earnings surprise of 30.77% in the preceding quarter. It surpassed estimates in two of the four trailing quarters with an average negative earnings surprise of 275.46%.

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