We upgraded our recommendation on
) to Neutral from Underperform on Feb 27, 2013. The company's
progress in various projects and its expectation of making
significant additions to its resource base in the coming years
are evident from the estimated compound annual growth rate (CAGR)
of 3% to 4% during 2016-2020.
Statoil, a major international integrated oil and gas company has
operations in all major hydrocarbon-producing regions of the
world, with an emphasis on the Norwegian Continental Shelf (NCS).
Statoil aims to achieve an equity production of above 2.5 million
barrels of oil equivalent in 2020.
In 2012, Statoil delivered strong exploration results, adding
significantly to its resource base by making several high impact
discoveries since the last 2 years. The company commissioned 46
exploration wells, of which 19 were on the NCS and 27 were
overseas. Discoveries of around 23 wells were announced during
In 2013, Statoil targets to bring five fast-track projects online
in 2013, with Hyme, Visund South and Vigdis North East fields
already commissioned. This goes to show the company's steady
focus on gaining success in high impact prospects and expanding
its operations worldwide. Further, Statoil is expected to start a
potentially high impact exploration program in the Barents Sea,
Hoop area and Mozambique by mid-2013.
Further, Statoil's strategic progress in the agreement with
Russian state-owned oil company OAO Rosneft, entitles it to
jointly explore and develop Russian offshore deposits in the
Barents Sea and Sea of Okhotsk. The venture is expected to
involve an investment of approximately $100 billion over decades
and the company is likely to benefit from its cooperation
alliance with Rosneft - the world's largest hydrocarbon-producing
However, management remains cautious about uncertainties in gas
value over volume, start-up and ramp-up, and operational
Other Stocks to Consider
While we prefer to remain on the sidelines for Statoil, there are
other stocks in the sector that appear rewarding. Among these,
Range Resources Corporation
EPL Oil & Gas, Inc
), which are expected to perform impressively over the next few
months, carry a Zacks Rank #1 (Strong Buy).
EPL OIL&GAS INC (EPL): Free Stock Analysis
ENERPLUS CORP (ERF): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
STATOIL ASA-ADR (STO): Free Stock Analysis
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