…As Eni profits steady as cost-cutting efforts offset oil uncertainty
By Charles Ebi
Between January and December last year, Nigeria’s upstream petroleum sector recorded significant activity with oil and gas companies submitting a total of 120 well drilling proposals in a 12-month period.
This signal growing investor confidence and regulatory efficiency under the current petroleum administration framework.
The Nigerian Upstream Petroleum Regulatory Commission said this in its 2024 Annual Financial Statement.
Out of these 120 proposals, 115 development well applications were approved, reflecting an approval rate of 88%.
The NUPRC said in the report that five applications were rejected, while 17 applications submitted in December 2024 are still under review, temporarily affecting the Commission’s target of a 100% closeout rate.
Of the approved development wells, 84 ,70% are targeted at oil field development, while 36 ,30% focused on Non-Associated Gas ,NAG, assets.
According to the NUPRC report, drilling activity has already commenced on majority of these projects.
The report said, “A total of one 120 well drilling proposals were received, and five development well applications were disapproved, this represents an approval performance of about 88%.
“Our benchmark of 100% close-out rate would have been achieved, but for the 17 applications currently under review, which were submitted in December 2024.
“Additionally, eighty-four (84) ,70% of the approved 120 development well applications aim to develop oil fields while the remaining 36 ,30% development well applications intend to develop NAG assets”.
By the end of 2024, the Report said 107 wells had been drilled. Among these, it added that 90 wells successfully reached their intended targets, while 15 wells are still undergoing drilling operations. Two wells were plugged or suspended due to various technical or operational issues.
A terrain-based breakdown of the 107 drilled wells reveals that 73% were located in land terrain, emphasizing the continued preference and accessibility of land-based operations.
Swamp terrain accounted for 12%, offshore terrain for 9%, and deep offshore terrain for 6 per cent.
Interestingly, the NUPRC report added that 100% of the approved gas development wells were drilled on land terrain, underlining its strategic importance in the ongoing exploitation of gas resources.
The approved Non-Associated Gas wells are projected to unlock about 2.63 trillion cubic feet ,TCF, of gas reserves.
The anticipated production from these wells stands at 764.50 million standard cubic feet per day ,MMscf/d, a development that aligns with Nigeria’s broader energy transition goals and its commitment to leveraging gas for industrialization and economic diversification.
Re-entry operations aimed at reviving previously inactive wells also witnessed strong activity in 2024.
During the period, a total of 529 re-entry applications were received. Of these, 508 were approved, 13 are still under evaluation, 7 were disapproved, and one was voluntarily withdrawn by the applicant.
This, the Commission said in the report, represents a re-entry approval rate of approximately 96%, highlighting regulatory responsiveness and growing operator interest in field redevelopment.
A significant portion of these re-entry efforts was driven by Indigenous operators, who continue to play an increasingly prominent role in Nigeria’s upstream sector.
Out of 152 applications received from Indigenous firms, 143 re-entry approvals were granted to 37 operators, representing an approval rate of over 94%.
Major contributors to this effort included NEPL, Seplat, Heirs Energy, Midwestern Oil and Gas, and Oriental Energy.
Newcomers to the sector, such as Atamba E&P, Anatolia Energy, Ashgrove, Eyrie Energy, BAP Energy, and Korolei Energy Limited, also secured re-entry approvals for wells within their portfolios.
These operations are not only intended to restore production but also to gather critical data that will guide future field development.
Collectively, these approvals are expected to restore or develop an estimated 370 million stock tank barrels ,MMstb, of oil and 2,087.04 billion cubic feet ,BCF, of gas.
The projected daily output from these efforts is 143,869 barrels of oil per day ,bopd, and 585.48 MMscf/d of gas, underscoring their potential impact on national production figures.
In line with its commercial regulatory mandate under the Petroleum Industry Act (PIA), the Commission benchmarked the drilling costs of all approved wells based on well type and operational terrain which includes land, swamp, offshore, and deep offshore.
Operators whose cost estimates significantly deviated from established benchmarks were identified for further engagement.
This proactive cost evaluation ensures transparency and aims to improve cost efficiency across drilling operations, while aligning with broader regulatory and commercial expectations.
The state of rig availability and utilization showed marked improvement in 2024. As of December 2024, 54 drilling rigs were tracked within Nigeria.
Among these, 42 rigs were fully licensed for operations, and 31 rigs were actively engaged in drilling projects across various terrains. Ten rigs were in transit between locations, while 13 remained on standby or stacked at different points throughout the year.
Meanwhile, Eni SpA reported profit that beat analyst estimates as proceeds from asset sales and sweeping cost cuts helped counter a weak oil market.
While crude prices were lower in the second quarter — weighing on earnings at other European oil companies Eni has been buoyed by a cost-reduction program introduced earlier this year, while asset disposals brought down debt.
Adjusted net income fell 25% from a year earlier to $1.3 billion (€1.13 billion), the Italian energy company said Friday in a statement. That exceeded the €932.6 million average estimate of analysts surveyed by Bloomberg.
Eni said it’s now targeting around $3.5 billion (€3 billion) of cost cuts this year, up from $2.3 billion (€2 billion) previously. The company has also reaped billions of euros by offloading stakes in its renewables arm and mobility division, and is in talks to sell half of its carbon capture unit.
“The combination of divestments set to come through this year, ongoing ‘self-help,’ as well as the additional cash flow from new ramp-ups sets Eni up for a strong second half of 2025 and 2026″, RBC Europe Ltd. analyst Biraj Borkhataria said in a note. He expects “growing free cash flow and a more resilient balance sheet than we’ve seen for many years”.
The shares rose as much as 0.6% at the open in Milan, before trading little changed as of 9:08 a.m. local time.
Eni confirmed plans for shareholders’ returns this year. It expects free cash flow before working capital of about €11.5 billion at $70-a-barrel crude, up from previous guidance of €11 billion. The company also raised its forecast for annual earnings from its gas division to €1 billion from €800 million.
