Eni Builds Uruguay Offshore Presence Through New Exploration Deals

Eni S.p.A E, an Italian integrated energy company, recently signed an agreement with MIWEN, a subsidiary of the Argentinian state-owned energy firm YPF YPF, and the Uruguayan National Oil Company ANCAP, to expand its presence in Uruguay. The agreement covers the OFF-5 exploration block offshore Uruguay.

Following the necessary approvals from the regulatory authorities in the South American nation, Eni is currently the operator of the OFF-5 exploration block. Its partner, MIWEN, holds the remaining 50% stake in the block. The block is in its first exploration period, and the companies are currently working to evaluate the area’s hydrocarbon potential and geological characteristics. This agreement is also expected to further strengthen the partnership between E and YPF, as the two firms are already working together on the integrated Argentina LNG project.

Additionally, Eni announced that it has agreed to acquire a 40% stake in the neighboring OFF-6 block. APA Corporation operates the OFF-6 block and will retain the remaining 60% interest. Per the agreement, Eni will fund a significant part of the initial exploration well, which is scheduled to be drilled in 2027.

The two agreements are slated to expand Eni’s upstream presence into a new prospective region. By entering Uruguay’s offshore exploration sector, Eni continues to build its position across Latin America’s energy sector and diversify its upstream operations. The near-term value of these investments will depend largely on exploration results, particularly the planned 2027 well in OFF-6 and the ongoing evaluation of the OFF-5 exploration block.

Zacks Rank & Key Picks

Both E and YPF currently carry a Zacks Rank #3 (Hold).

Some better-ranked stocks from the energy sector are Valero Energy VLO and Galp Energia SGPS SA GLPEY. While Valero sports a Zacks Rank #1 (Strong Buy), Galp Energia carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks Rank #1 stocks here.

Valero Energy is a leading refining player with a robust network of 14 refineries and a combined high-complexity throughput capacity of 3 million barrels per day, which distinguishes it from other independent refiners. The company’s refineries have a combined Nelson Complexity Index of 11.5, which implies that they can process a wide variety of feedstocks, convert them into higher-value products and shift product yields according to market conditions.

Galp Energia is a Portuguese energy company engaged in exploration and production activities. The company’s oil exploration efforts have yielded positive results, particularly with the Mopane discovery in the Orange Basin, offshore Namibia. This discovery allows Galp to diversify its global presence, with the potential to become a significant oil producer in the region. It is engaged in refining and marketing of oil products and natural gas marketing and sales.

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This article originally published on Zacks Investment Research (zacks.com).

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