By Liam Moloney
ROME--Italian energy firm, Eni SpA (E) said Tuesday it has signed an agreement with Quicksilver Resources Inc. (KWK) to explore and develop onshore unconventional oil reservoirs in the U.S.
The deal will help Eni gain a bigger foothold in an industry that has revolutionized the U.S. energy market due to abundant hydrocarbon supplies.
As part of the contract, Quicksilver and Eni will jointly evaluate, explore and develop onshore shale oil, the Rome-based company said in a statement. Eni will have half a stake in two Quicksilver acreages in the Leon Valley, in the West Texas county of Pecos.
Eni said it will pay $52 million for the acreages.
The Leon Valley is located in the Delaware Basin, where current daily production is almost 500,000 barrels of oil equivalent from conventional and unconventional reservoirs. Eni said it is estimated that output from the Delaware Basin will double within five years.
The Italian energy firm is a relatively small player in the shale gas and oil boom although it is planning to expand into the untapped Chinese market and is looking to develop its prospects in Algeria.
Hydraulic fracturing--also known as fracking, a technique in which water, chemicals and sand are injected at high pressure to fragment rock and release the hydrocarbon trapped inside--has enabled companies to tap unconventional resources that would have been unprofitable to extract with previous techniques.
Tuesday's deal between Eni and the Fort Worth, Texas-based company follows a 2009 accord in which the Italian firm spent $280 million on a 27.5% stake in a Quicksilver acreage covering the Barnett Shale, one of the first areas that lead to the unconventional natural gas boom in the U.S.
Eni said its current daily production in the U.S. exceeds 90,000 BOE.
At 1222 GMT, Eni shares fell 0.9% at 18.32 euros ($24.80), slightly less than Italy's benchmark FTSE Mib Index.
Write to Liam Moloney at email@example.com
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November 05, 2013 07:44 ET (12:44 GMT)Copyright (c) 2013 Dow Jones & Company, Inc.
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