Eni to Sell Egyptian Gas-Field Stake to Rosneft
12 December 2016 - 11:40PM
Dow Jones News
Eni SpA agreed to sell a 30% stake in giant Egyptian gas field
Zohr to PAO Rosneft for $1.58 billion, part of the Italian energy
company's plans to raise cash to confront low oil prices.
Russia's Rosneft, which has an option to buy another 5% of the
field under the same conditions, will pay $1.13 billion for its
stake as well as an additional $450 million to cover development
costs already incurred by Eni.
Eni has been among the most successful in the industry in recent
years at finding new oil and gas fields and has often sold stakes
early on to share development costs and raise funds. Including the
sale to Rosneft, Eni has raised $6.3 billion in the past four years
selling stakes in its recently discovered oil and gas fields. Last
month, Eni sold a 10% stake in the same Egyptian gas field to BP
PLC for $525 million.
The Italian company in March promised €7 billion ($7.42 billion)
in asset sales by 2019 with most of that coming through divestments
in oil and gas projects. Eni, which is 30%-owned by the Italian
government, is planning to sell part of its holding in another
large field off the coast of Mozambique that could raise several
billion dollars.
Monday, Brent hit its highest level since July 2015 after
non-OPEC oil-producing countries agreed over the weekend to reduce
output, but at about $57 a barrel crude is still less than half of
where it was 2½ years ago. In the wake of crude's fall to under $30
a barrel, Eni slashed its dividend and announced heavy cost cuts to
accompany the asset sales.
While the most recent announced production cuts coupled with
those pledged last month by producers in the Organization of the
Petroleum Exporting Countries have been cheered by the markets, oil
companies remain cautious because compliance among the cartel's
members has often failed to live up to promises.
The Zohr field, discovered in mid-2015, is the largest ever gas
find in the Mediterranean with 30 trillion cubic feet of gas. The
first gas is expected to come to market at the end of next
year.
If Rosneft and BP both exercise their options to buy additional
5% stakes in Zohr, Eni's holding will fall to 50%, a level it has
said it won't breach.
Write to Eric Sylvers at eric.sylvers@wsj.com
(END) Dow Jones Newswires
December 12, 2016 07:25 ET (12:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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