) is on track for an extensive exploration venture in the Skrugard
area of the Barents Sea. This exploration operation will comprise
four new prospects near its Skrugard and Havis discoveries and is
due to start in late 2012. The campaign also includes production
licenses PL532 and PL608.
The company remains upbeat on Barents Sea exploration that led
to two significant oil discoveries with estimated recoverable
volumes of 400 million to 600 million barrels of oil equivalent in
PL532, within a year. Statoil has also observed flat spots in some
of the prospects that mirror those in the already present Skrugard
and Havis discoveries.
The four probes will be drilled back-to-back with the start-up
of Nunatak prospect in PL532. It is scheduled to be spud in
December this year, using Seadrill's ultra-deepwater
semi-submersible rig West Hercules. Subsequently, the unit will
join the Skavl prospect located in the same license, and later on
to the Iskrystall prospect in PL608. However, the company did not
disclose details for the fourth prospect.
The rig − operated by Seadrill affiliate North Atlantic Drilling
− will be winterized to meet harsh weather conditions in the
Barents Sea. Statoil holds 50% operational interest in both the
licenses, along with partners
) and state holding company Petoro AS holding a respective 30% and
20% stake in the permits.
Meanwhile, Statoil is ready to submit a plan for the development
and operation (PDO) of its Johan Sverdrup discovery in the North
Sea, west of Stavanger by the fourth quarter of 2014. The find,
considered one of the largest on the Norwegian Continental Shelf
(NCS) since the mid 1980s, is anticipated to have a producing life
of more than 30 years, extending to 2050. Statoil will act as the
operator till an investment decision is taken and the PDO is
We believe the company is fairly active in its development
operations that are reflected in its capex expectation. During the
first quarter of 2012, Statoil delivered strong exploration results
and added three high impact discoveries to its resource base. The
company made significant discoveries in offshore Norway, Tanzania
However, rising production costs (which leaped 10% year over
year in first quarter 2012) and a higher capex remain our concerns.
Additionally, Statoil's performance will likely be affected by the
volatile macro environment, fluctuating oil and natural gas prices
and geo-political disturbances. Hence, we remain Neutral on Statoil
for the long term. The company also holds a Zacks #3 Rank, which is
equivalent to a short-term Hold rating.
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STATOIL ASA-ADR (STO): Free Stock Analysis
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