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Eni & SNOC to Move Forward With Sharjah Natural Gas Project

Zacks Equity Research
·3 min read

Eni S.p.A. E is expected to move ahead with the Sharjah onshore gas project in United Arab Emirates, despite the ongoing coronavirus pandemic and the company’s curtailed capital budget, per S&P Global Platts.

Eni is a partner with Sharjah National Oil Corporation or SNOC for the natural gas project in Block B in Sharjah. While Eni has a 50% interest in the Concession Area B, SNOC holds the remaining 50% operating stake. Notably, the Italian energy major was awarded three blocks in Sharjah in its first international licensing round in 2019. The natural gas project is of huge significance, considering the fact that the existing gas fields in Sarjah are suffering from natural decline. It can provide low-cost commodity for power generation.

Importantly, Eni announced the Mahani reservoir discovery at the site last January. The first drilled well at the region showed flow rate possibility of 50 million cubic feet of natural gas per day of lean gas and associated condensate. Production is expected to commence in the next year from the site. The companies have plans to start drilling the second well in the region in 2021.

Since the coronavirus pandemic is hurting global energy demand, Eni has downwardly revised capital spending budget for 2020 by 35% from the initial guidance. For 2021, the energy major has also downwardly revised capital spending estimation by 30% from the initial projection. The company added that the capital budget reduction will be mostly focused on the upstream business. However, the budget cut is not expected to affect the Sharjah gas project.

Price Performance

Eni’s shares have decreased 20.8% in the past six months compared with 20% decline of the industry it belongs to.

Zacks Rank and Stocks to Consider

Currently, the stock carries a Zacks Rank #4 (Sell). Some better-ranked players in the energy space include Equinor ASA EQNR, Apache Corporation APA and Matador Resources Company MTDR. While Equinor sports a Zacks Rank #1 (Strong Buy), Apache and Matador hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Equinor’s bottom line for 2021 is expected to skyrocket 117.3% year over year.

Apache’s bottom line for 2021 is expected to surge 84.3% year over year.

Matador Resources’ sales for 2021 are expected to rise 12.2% year over year.

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