Appraisal well drilling results show Eni’s mega Zohr discovery is living up to expectations, striking a 455-m (1,493 ft) hydrocarbon column which the company said confirms the find is “a single and continuous mega tank of natural gas.”

Reaching a depth of 4,171 m (13,684 ft), the Zohr 2X appraisal well—the first for the discovery announced in August 2015—was drilled in the Shorouk Block southeast of the Zohr 1X discovery well in a water depth of 1,463 m (4,800 ft), Eni said Feb 26.

“The comprehensive formation evaluation program confirmed the same gas-water contact and connection with the discovery well,” Eni said, noting the discovery is entirely in the Egyptian Economic Zone.

The positive results were delivered alongside news that the Nidoco North 1X well hit more than 43 m (141 ft) of net gas and condensates in Messinian-age sandstone layers. Eni said the onshore well, located in the Nile Delta, was drilled as a deviated well to the offshore, shallow-water Nooros East Field.

Eni along with partner BP, which holds a 25% stake in the Abu Madi West concession, hope to grow production in the Nooros area with the addition of new development wells. If all goes as planned, production capacity could surpass 60,000 barrels of oil equivalent per day (boe/d) by mid-2016.

“This new discovery, with immediate return of production capacity, is the result of Eni’s near field exploration strategy targeting high value activities able to grant the rapid development of discoveries through existing infrastructures,” Eni said.

Eni’s continued exploration success in Egypt comes amid a downturn that has caused many companies to reduce exploration spending. Yet some, Eni included, are pushing forward with plans to grow production in some areas to meet current and future energy demand needs.

The company, however, is not immune to lower commodity prices caused by the worldwide hydrocarbon supply-demand imbalance.

Before highlighting its Egyptian exploration successes Eni reported on Feb. 26 a net fourth-quarter 2015 loss of 8.46 billion euros (US$9.4 billion). Like its peers, Eni has pursued efficiency gains and cost-savings, which the company said exceeded its expectations: capex fell by 17%, while opex per boe dropped by 13%--nearly double initial guidance.

Eni also worked to strengthen its balance sheet with A&D moves such as selling part of its stake in Saipem and Galp. Plans for 2016 include reducing capital spending by 20%, being “increasingly selective with exploration plays” and renegotiating contracts, while growing production in the short and medium term, Eni said.

“Our efforts to rationalize costs have achieved better than expected results, and enabled us to self-finance capex in 2015 at $50/bbl, $13/bbl less than expected a year ago,” Eni CEO Claudio Descalzi said. “These actions of efficiency, however, have not affected Eni’s impressive level of growth in the market, in the short or the medium term. In E&P, production grew by 10% [for FY 2015]. Both our exploration resources and our proven reserves, recorded high growth, demonstrating the quality of our portfolio of assets.”

Eni’s production hit a five-year high, rising 14% to 1.88 MMboe/d in the fourth quarter, as exploration activities added 1.4 Bboe of resources, about triple that conveyed in initial guidance, due in part to the “supergiant” Zohr discovery.

The appraisal plan for Zohr includes drilling another three wells to fully delineate the field, which Eni believes could hold up to 30 Tcf of lean gas in place. Production is expected to begin by year-end 2017, reaching 75 million standard cubic feet of gas per day by 2019.

Velda Addison can be reached at vaddison@hartenergy.com.

Offshore