Statoil Skrugard Appraisal Success - Analyst Blog


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Norwegian oil company Statoil ASA ( STO ), the operator of production license ( PL ) 532, is in the process of concluding the drilling of appraisal well 7220/5-1 in the Skrugard discovery in the Barents Sea.

The main intention behind the appraisal was to validate the volume estimate set earlier for the Skrugard discovery as well as collect reservoir and overburden data for field development planning.

Appraisal well 7220/5-1, located around three kilometers north of the discovery well 7220/8-1 in the Skrugard formation and six kilometers northeast of the Havis discovery, was drilled by the semi-submersible rig Transocean Barents. The well was encountered in a water depth of 388 meters and drilled to a vertical depth of 1,740 meters below sea level.

The appraisal results of 7220/5-1 have established a gas column of 26 meters superimposing another oil column of about 48 meter. The outcomes of both the column heights and reservoir properties were on par with the estimates.

To date, Skrugard remains the northern most field development on the Norwegian continental shelf. This is the third well to be discovered in this area, after Goliat and Havis and was awarded in the 20 th licensing round. Statoil along with its Italian partner Eni SpA ( E ) is participating in all three commercial discoveries in the Barents.

This substantiates the previous volume projection for the Skrugard discovery and the total resource estimate for the Skrugard and Havis structures in the range of 400-600 million barrels of recoverable oil.

Statoil holds a 50% interest in the PL 532 while Eni and Petoro AS hold 30% and 20%, respectively. Per Eni, a new exploration campaign will likely commence in PL 532 by year-end 2012 with intent of drilling new wells around Skrugard that can later add potential volumes and be linked to a future production hub.

The partners are currently evaluating the alternative development concepts. The positive outcome forms the basis for a development of Skrugard and Havis. The samples gathered while appraisal are vital for the future development of Skrugard and Havis that will in turn make the area a core region in Statoil's portfolio.

We maintain a Neutral rating on the stock for the long term.

ENI SPA-ADR ( E ): Free Stock Analysis Report
STATOIL ASA-ADR ( STO ): Free Stock Analysis Report
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