Statoil Employs Seadrill Rig - Analyst Blog


Norwegian oil giant Statoil ASA ( STO ) has hired Seadrill Limited 's ( SDRL ) rig -- West Aquarius -- for deepwater exploration activity offshore Newfoundland, Canada. Statoil did not reveal the contract value or the hiring charges for the vessel.

The ultra deepwater drilling rig belongs to the sixth generation semi-submersible DP3 vessel class. Built in 2009, in South Korea, the vessel is equipped to function in rough environment up to a water depth of 3,000 meters.

Statoil aims to drill three exploration wells off Newfoundland and is expected to commence operations in late 2012 and continue through 2013. Two of the wells are located in the Flemish Pass Basin, where Statoil remains the operator with a 50% interest. The other partners in these licenses are Chevron Corporation ( CVX ) and Repsol YPF SA, holding 40% and 10%, respectively. The third well lies in the Jeanne d'ArcBasin.

Statoil has chartered West Aquarius from ExxonMobil Corporation ( XOM ). In November 2011, ExxonMobil had contracted West Aquarius for a period of two years at a dayrate of $526,000, holding an option for further contract extension until June 2017.

The company is increasingly shifting its focus to the still-unexplored areas of offshore Newfoundland, and intends to become one of the major producing operators of the region in the coming years. As exploration remains a key component of its growth strategy, this will enhance the company's volume growth prospects.

Per the Zacks Consensus, the earnings per share estimate for Statoil is $3.00 for 2012 and $3.02 for 2013. This implies a decline of 69.5% in 2012 and a growth rate of 0.9% in 2013.

Statoil holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. Longer term, we maintain our Neutral recommendation on the stock.

CHEVRON CORP (CVX): Free Stock Analysis Report
SEADRILL LTD (SDRL): Free Stock Analysis Report

STATOIL ASA-ADR (STO): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CVX , SDRL , STO , XOM

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