Norwegian oil giant
) has sold its 25% working interest in an exploration license
offshore Mozambique to Tullow Oil PLC − an U.K. based oil
exploration and production company. However, the parties kept the
commercial terms of the deal confidential.
The divested properties comprise two blocks in area 2 and 5,
offshore Mozambique in the Rovuma basin, covering 7800 square
kilometers. The blocks are located at a water depth of 300 meters
to 2,400 meters.
Following the transaction, Statoil will retain its 65% stake in the
license and act as the operator. On the other hand, Mozambique's
state run company Empresa Nacional de Hidrocarbonetos ("ENH") will
hold the remaining 10% interest. The first well in the license is
scheduled for next year.
This agreement is in sync with the Norwegian company's exploration
strategy of early access in a prolific area with its significant
presence, while sharing the geological risk. Of late, major oil and
gas companies, like
Anadarko Petroleum Corp.
), made major gas finds to the north of this acreage.
Statoil has been in the Mozambique region for the past six years
and has recently acquired 30% of Tullow's share in the 2,369 square
kilometer deepwater Block 47 in Suriname. Recently, Statoil also
discovered a huge gas deposit in the Lavani well on Block 2, off
The company plans to develop its gas find through a liquefied
natural gas solution but has not revealed the cost estimate. Per
the analysts, the development cost of the project would be around
The initial outcome of the logging proved that the Lavani well
holds an estimated recoverable resource of 3 trillion cubic feet
(Tcf) of gas. Notably, according to the U.S. Geological Survey,
East Africa has an estimated reserve of 253 Tcf of gas off Kenya,
Tanzania and Mozambique and is becoming the world's rapidly growing
However, the region needs proper infrastructural development and
hence major energy companies, like Statoil, are expected to
financially back the development of a gas liquefaction facility
We remain upbeat on Statoil's long-term production growth
profile given its growing upstream presence in the emerging basins
of the Barrents Sea, Africa and the deepwater U.S. Gulf of Mexico.
We also believe that the growing share of natural gas in Statoil's
Norwegian Continental Shelf volume mix and its extensive interests
in infrastructure assets enable it to play a leading role in the
European natural gas market.
The company retains a Zacks #2 Rank, which is equivalent to a
short-term Buy rating.
ANADARKO PETROL (APC): Free Stock Analysis
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