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Equinor Raises Resource Estimates in Johan Sverdup Project

Equinor ASAEQNR and other partners of Johan Sverdrup have submitted the development plan for the second phase of the project to the Norwegian Ministry of Petroleum and Energy.

The full-field development of Johan Sverdrup is estimated to contribute significantly to the value creation as the resources estimates have been raised and investment costs have been reduced. The field is projected to yield about 660,000 barrels per day, at plateau, with a break-even price of less than $20 per barrel and very low CO2 emissions of 0.67 kg per barrel. This makes it the world's most carbon-efficient field.

Through the life of the project, estimated more than 50 years, the full-field development of Johan Sverdrup is expected to contribute an income of more than NOK 900 billion to the Norwegian State. Per the estimates of an analysis by Agenda Kaupang, the development of Johan Sverdrup Phase 1 and Phase 2 can contribute more than 150,000 man-years in Norway in 2015-2025 time periods. In the operations phase, Johan Sverdrup is likely to create employment of more than 3400 man-years per year.

The first phase of the development is 80% complete. Close co-operation with suppliers and partners has helped the company lower the projected investments for Phase 1 by about 30% or NOK 37 billion since submission of the Phase 1 Plan for development and operation (PDO) of NOK 86 billion. The Phase 1 is expected to be operational by November 2019.

Per the terms, the PDO for Johan Sverdrup Phase 2 also comprises measures to aid the transfer of power from shore to the Utsira High by 2022. Annually emission savings from the Johan Sverdrup field are projected at 460,000 tons of CO2, which corresponds to annual emissions from 230,000 private cars.

In the Phase 2 PDO, the resource estimate for the entire field has been increased to 2.2-3.2 billion barrels of oil equivalent from 2.1-3.1 billion barrels, with a projected estimate of 2.7 billion barrels. The investment estimate has been lowered to NOK 41 billion with the break-even price less than $25 per barrel. The Phase 2 development is expected to start producing from the fourth quarter of 2022. The plan comprises a number of improved technologies like water alternating gas injection (WAG), permanent reservoir monitoring (PRM) for the full field, stepwise implementation of fibre optics in wells, step-by-step development of digital twinning, technologies for automatic drilling control on the drilling platform, high-speed telemetry drill pipe, improvements in cement quality and virtual rate monitoring on subsea wells.

Equinor, the operator of Johan Sverdrup, has a stake of 40%. Other partners are Lundin Norway, Petoro, Aker BP and TOTAL SA TOT holding 22.6%, 17.4%, 11.6% and 8.4%, respectively.

Price Performance

In the past year, Equinor's shares have surged 40.9% compared with the industry 's 26.1% rise.

Zacks Rank & Stocks to Consider

Equinor currently carries a Zacks Rank #3 (Hold).

A few better-ranked players in the same sector are Petroleo Brasileiro S.A. PBR , or Petrobras SA and Helix Energy Solutions Group, Inc HLX . These stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Petrobras is the largest integrated energy firm in Brazil and one of the major players in Latin America. It pulled off an average positive earnings surprise of 10.4% in the last four quarters.

Helix Energy offers specialty services to the offshore energy industry. The company delivered an average positive earnings surprise of 66.7% in the trailing four quarters.

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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 Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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