Eni plans to buy BP’s oil and gas assets in Algeria

Eni SPA E plans to purchase oil and gas assets from BP plc BP in Algeria as part of efforts to realign their operations to deal with the heavy debt plaguing businesses amid climate pressures, according to Reuters.

Energy companies, which use carbon-intensive techniques for oil and gas exploration and production, face immense pressure from investors and activists to reduce emissions. Importantly, most companies believe that offloading carbon-intensive assets would result in real emission reductions to address concerns about climate change.

As a result, the two companies are considering the transfer of their assets via several options, including an outright sale and the possibility of providing BP with an option to take stakes in Eni’s assets around the world. Additionally, the companies plan to form a joint venture in Algeria, similar to the one formed in May 2021 to combine their upstream portfolios into a new venture in Angola.

According to Reuters, the deal would help BP divest its assets in Algeria, as the company has been trying to sell assets since 2019. The company said 6,000 barrels per day of liquid production and 141 million cubic feet of gas per day in from Algeria in 2020.

Here again, Eni’s assets in Algeria are much more important. In particular, the company’s acquisition of BP’s assets should make Algeria a hub.

The companies intend to transform their traditional oil and gas activities into renewable energy and low-carbon activities in the decades to come. As part of the strategy, the two companies plan to focus their operations on the most profitable fields, such as the Gulf of Mexico for BP and the giant offshore Zohr gas field in Egypt for Eni.

In particular, Eni has signed several share buyback agreements with BP in Africa, which include the sale of stakes in the Nour and Shorouk fields in Egypt. The multiple agreements also include a major commercial contract for LNG from Eni’s Coral South project in Mozambique.

Company Profile and Price Performance

Based in Rome, Italy, Eni is one of the world’s leading integrated energy players.

The company’s shares have outperformed the industry for the past six months. Its stocks gained 23.3% from the industry’s 19.2% growth.

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Zacks ranking and actions to take into account

Eni currently wears a Zack Rank # 3 (Hold).

Some better ranked players in the energy field are Whiting Oil Company WLL and Bonanza Creek Energy, Inc. CBIE, each currently sporting a Rank 1 of Zacks (strong buy). You can see The full list of today’s Zacks # 1 Rank stocks here.

Over the past 60 days, Zacks’ consensus estimate for 2020 Whiting Petroleum earnings has been increased by 153.3%.

Bonanza Creek’s profits for 2021 are expected to increase 5.8% year-over-year.

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