Exploration activity is also a distinctive approach of Eni’s upstream model, ensuring a large amount of resources at low costs, flexibility in the short-term and fueling growth over the long term. In 2018 additions to the Company’s reserve backlog were 620 million boe of new equity resources. Main discoveries or appraisal activities were in Egypt, Cyprus, Norway, Angola, Nigeria, Mexico and Indonesia. The overall commercial success rate was 66% net to Eni, best performance of the last eighteen years.
Finalized an agreement with BP and National Oil Company in Libya to boost exploration activities in the Country. The agreement strengthened the parties’ commitment to social development in the Country through the implementation of specific education and technical training programs. Awarded a 40% interest of the Blocks 4 and 9 located in the offshore Lebanon. Awarded a 100% interest of 124 exploration licenses located in the Eastern North Slope in Alaska with high mineral potential and nearby to existing production facilities. Signed the contract for the exploration and development rights of the offshore block A5-A, in the deep offshore of Zambesi. Eni was awarded the operatorship of the block with a 59.5% interest. Awarded a 65% interest in the Area 24 license and a 75% interst in the Area 28 license located in offshore Mexico. Eni operates both licenses. Replacing portfolio of exploration leases in the year, added approximately 29,300 square kilometers of new acreage.
Exploration and appraisal activity was €750 million (€715 million in 2017) and included exploration expenditure and prospecting, geological and geophysical expenses in the year. Exploration and appraisal activity covered approximately 45% of total activity in 2018 and were conducted in particular in Indonesia, Norway, United States, Angola and Vietnam. In 2018 exploration expenses were €380 million (€525 million in 2017) and included the write-off of unsuccessful wells amounting to €93 million (€252 million in 2017), which also related to the write-off of unproved exploration rights, if any, associated to projects with negative outcome. The write-off of expenses related to unsuccesful drilling activities mainly concerned projects in Vietnam and Morocco. In addition, 80 exploratory drilled wells are in progress at year-end (40.3 net to Eni).
The dual exploration model
The Dual Exploration Model is a pillar of Eni's strategy which aims to create cash flow in advance of exploration successes by means of the partial diluition of the stakes in exploration leases where Eni retains the operatorship and control of the asset.
During the year the following dispoals were closed with this approach:
- disposal of 10% interest of the Shorouk concession in Egypt, where is located the supergiant gas Zohr field, to Mubadala Petroleum, an United Arab Emirates oil company;
- farm-out of part of Eni’s interest in the Nour exploration license in Egypt to BP and Mubadala companies. These companies purchased a 25% interest and 20% interest, respectively;
- finalized swap agreements of stake in explorations assets located in Mexico with Lukoil company;
- signed an agreement to divest a 35% interest in the Area 1 license, where 2.1 billion of boe in place discovered, to Qatar Petroleum oil company.