Statoil Set to Drill Apollo Well - Analyst Blog

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Norwegian giant, Statoil ASA ( STO ) is going ahead with its plan to drill Apollo wildcat, one of the world's northernmost wells in the Barents Sea. The move follows the Norwegian authorities' rejection of the appeal from Greenpeace.

However, in an attempt to stop drilling on the prospect in the Hoop area, Greenpeace's ship, Esperanza continues to block Statoil's rig, Transocean Spitsbergen. Statoil has termed such a step by the activist group to be "illegal". Moreover, this has led Norwegian authorities to set up a 500-meter safety zone around the company's drilling site.

The appeal of Greenpeace was based on the grounds that according to international law, due notice ought to be given for establishing a safety zone. However, the appeal was dismissed. The group had also demanded an assessment of the drilling site's proximity to the Arctic ice sheet and the chances of an oil spill reaching the Bear Island natural reserve. However, the Ministry of Climate & Environment stated that Statoil's plans did not violate Norwegian regulations.

Located 175 kilometers from the Bear Island nature reserve and 300 kilometers north of Norway's mainland, in international waters, Apollo well lies in an area where over 100 exploration wells have been drilled over the last 34 years.

Statoil is allowed to carry out drilling operations, including drilling in oil-bearing layers, as planned. The company has received all the required approvals from the authorities for commencing its work.

The drilling delay is costing the company an estimated NOK7.5 million ($1.25 million) a day.

Currently, Statoil carries a Zacks Rank #3 (Hold). Investors interested in the same sector could consider stocks like Encana Corp ( ECA ), CVR Refining, LP ( CVRR ) and Matrix Service Company ( MTRX ), all of which sport a Zacks Rank #1 (Strong Buy).

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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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