Eni SpA E, the Italian energy giant, is set to kickstart a drilling campaign at the Zohr offshore gas field in Egypt. A specialized drilling ship, Saipem 10000, is preparing to arrive in Egypt later this month. According to the Egyptian Ministry of Petroleum, the initiative aims to reverse declining gas production in Egypt and enhance output from one of the region’s largest gas fields.

Eni, which discovered Zohr in 2015, played a key role in establishing Egypt as a prominent gas producer. However, the country’s domestic gas production has been on a downward trajectory since 2021, hitting a six-year low in 2024. Zohr’s average output in the first half of 2024 was 1.9 billion cubic feet per day (bcf/d), significantly below its 2019 peak levels.

In response, Eni plans to deploy the Saipem 10000, a state-of-the-art drilling vessel owned by Saipem, an Italian energy services firm. The vessel is expected to leverage advanced drilling technologies to explore and tap into additional reserves within the Zohr field, located in the eastern Mediterranean.

The Zohr gas field remains central to Egypt’s energy strategy. Originally intended to boost the country’s gas exports and enhance regional energy security, its role has evolved as declining domestic production has redirected efforts toward stabilizing output to satisfy both local and export needs.

Eni confirmed its commitment to resuming drilling operations in a statement, emphasizing the use of cutting-edge technology to achieve production targets. The Egyptian Petroleum Ministry echoed similar sentiments, highlighting the field’s potential to reinvigorate the nation’s energy sector.

The drilling campaign reflects Eni’s broader strategy to optimize its assets in Egypt and support the country’s ambitions of becoming a reliable energy hub. With the arrival of Saipem 10000, expectations are high for a significant uptick in Zohr’s output, potentially reversing the declining trend and reinforcing Egypt’s position in the global energy landscape.

E’s Zacks Rank & Key Picks

E currently has a Zack Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked stocks like TechnipFMC plc FTI, Sunoco LP SUN and Oceaneering International, Inc. OII, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. It focuses on the subsea segment in offshore basins worldwide. FTI’s growing backlog ensures strong revenue visibility and supports margin improvements.

Sunoco is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes over 10 fuel brands, ensuring a stable revenue stream. Sunoco is poised to benefit from the strategic acquisitions aimed at diversifying its business portfolio.

Oceaneering International delivers integrated technology solutions across all stages of the offshore oilfield lifecycle. With a geographically diverse asset portfolio and a balanced revenue mix between domestic and international operations, the company effectively mitigates risk. As a leading provider of offshore equipment and technology solutions to the energy sector, OII benefits from strong relationships with top-tier customers, ensuring revenue visibility and business stability.

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