(E) Eni SpA Commences Appaloosa Oil Flow

Italian oil major Eni SpA (E) announced the start-up of oil production from the Appaloosa field in the deepwaters of the U.S. Gulf of Mexico (GoM). This follows the Nikaitchuq field start-up in Alaska earlier this year and strengthens Eni’s hold as a producer in the GoM.

The Appaloosa oil field is situated in 2,500 feet deep waters about 60 miles offshore the Louisiana coast southwest of New Orleans. Production started on June 21, using a 20 mile flow line tied back to the Eni operated Corral platform.

The well, located within the MC 459 Federal Unit, which includes blocks MC 459, 460 and portions of MC 503 and 504, is presently flowing at a rate of approximately 7,000 barrels of oil equivalent per day.

Eni is the operator of the field with 100% working interest. Appaloosa is the second field to commence production on the Corral Platform, which is processing 46,600 gross barrels of oil equivalent per day (Boe/d), of which 33,000 are for Eni.

In December 2008, Eni sanctioned the Appaloosa field for a total investment cost of $228 million. The development of the field comprises drilling subsea wells linked to the Corral platform.

Subsequently, in May 2009, the company awarded Transocean Ltd. (RIG) a contract to drill the development well in Mississippi Canyon block 459. Later in 2009, the company also contracted Technip to tie back the well to the Corral platform.

Eni owns lease interests in 333 blocks in the GoM and in 411 leases in the Barnett gas shales onshore Texas, in partnership with U.S. natural gas and oil exploration and production company, Quicksilver.

Moreover, the company also holds interests in 140 leases in Alaska, between offshore and the North Slope, where it is currently operating the Nikaitchuq oil project. The Italian company’s total net production in the U.S. is 100,000 Boe/d, 60% of which is operated by the company.

Based in Rome, Italy, Eni with its consolidated subsidiaries is engaged in oil and gas, electricity generation, petrochemicals, oilfield services and engineering industries. The company currently retains a Zacks #3 Rank, which translate into short-term Hold rating. We maintain long-term Neutral recommendation for Eni.

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