updated 4/30/2007 9:03:28 AM ET 2007-04-30T13:03:28

Italian energy company Eni said Monday it agreed to buy U.S. utility operator Dominion Resources' production, development and exploration assets in the Gulf of Mexico for $4.8 billion.

Eni SpA said in a statement the purchase will increase its Gulf of Mexico production to 110,000 barrels of oil equivalent a day by the second half of the year, from the current 36,000 barrels.

The transaction is subject to government approvals and is expected to be completed on July 2. The deal with Eni Petroleum Co., a unit of Eni, includes about 967 billion cubic feet equivalent of proved natural gas and oil reserves in the Gulf of Mexico shelf and deep water as of Dec. 31, 2006.

Eni shares rose 0.4 percent to 24.44 euros in Milan trading.

Eni's CEO Paolo Scaroni said the deal will allow the company to achieve synergies with its other activities in the United States, where Eni has been operating since 1966. The deal was also the latest in a series of acquisitions this year by Eni in Congo, Angola, Alaska and Russia, the statement said.

Richmond, Va.-based Dominion Resources Inc. said in May the company was considering selling certain business units because of concerns that Dominion's stock was being undervalued. The exploration and production (E&P) business had grown to become Dominion's most profitable unit, overshadowing the company's core utility and power generation businesses.

"Dominion has been extremely successful in the E&P business, but that success has not been fully reflected in our share price," CEO Thomas F. Farrell II said in a statement. "Our plan is designed to realize the value of these assets for our shareholders."

Dominion said in the statement that it continues "to pursue the disposition of its U.S. onshore E&P operations, except those in the Appalachian Basin, as well as its E&P operations in western Canada."

It said it expected to make further announcements "in the near future."

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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