Statoil Buys 25% in Espirito Santo - Analyst Blog

Norwegian energy major Statoil ASA ( STO ) has purchased a 25% participating interest from Brazilian metals and mining firm Vale SA ( VALE ) in BM-ES-22A in the Espirito Santo Basin, offshore Brazil. The transaction is liable to the consent of Brazilian authorities and other conditions for closing.

Located in the Outer Espirito Santo Basin and adjacent to the BM-ES-32 license, BM-ES-22A consists of Blocks ES-M-468 and ES-M-527. Block BM-ES-22A is operated by Petrobras ( PBR ) with equity of 75%, while Vale holds the remaining 25% stake. The exploration well spud in a water depth of 2,130 meters was concluded in December 2010 and encountered 70 meters of light oil in a good quality sandstone reservoir.

Petrobras, is the operator of license BM-ES-32, which holds the Indra discovery, with an interest of 60% and Statoil is the partner holding 40%. The Indra discovery overlaps the border between BM-ES-22A and BM-ES-32.

With the recent acquisition, Statoil will now participate in the ongoing appraisal of the well on Indra in BM-ES-22A. Another exploration well is planned for 2013. The purchase is in sync with the company's exploration strategy of enhancing operations in the core areas and assists Statoil in enlarging its footing in a prioritized basin.

The exploration results over the past decade in the Espirito Santo Basin provides stimulus for additional scrutiny of the area. The proposed operations in BM-ES-22A pose various exploration risks but will help in further examination of this play.

Currently, Statoil is the largest international operator in Brazil. The company was involved in the high impact discovery Pão de Açúcar in February 2012 and also operates the Peregrino field, which was commissioned in April 2011.

Statoil holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. Longer term, we maintain our Neutral recommendation.

PETROBRAS-ADR C (PBR): Free Stock Analysis Report

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

VALE SA (VALE): Free Stock Analysis Report

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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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