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Statoil (STO) Purchases 24% of UKCS License for Alfa Sentral

Statoil ASASTO purchased share equity of 24% in the U.K. license for the Alfa Sentral field. The acquisition was valued at $15 million.

Alfa Sentral is a c.60 million barrels of oil equivalent (mmboe) gas and condensate field. The field is intended to be developed as a tie-back to the existing infrastructure for Statoil operated Sleipner on the Norwegian Continental Shelf (NCS). Sleipner's facilities will therefore be better utilized through work on Alfa Sentral.

Through the latest transaction Statoil has gained 24% interest in UK Continental Shelf (UKCS) license P312. This license, along with license PL046 on the NCS, makes up the Alfa Sentral field. Statoil also operates in PL046 with a holding of 62%.

The transaction is anticipated to close by the end of 2015. Interestingly, this deal has boosted Statoil's equity holding in a high priority project in a core area. Hence, this strengthens the energy behemoth's foothold on both the NCS and UKCS.

Concept selection was passed in Sep 2015 for the Alfa Sentral project. Discussions to combine the field are likely to begin shortly. A final investment decision will be taken in late 2016 and production is scheduled to start in 2020.

Statoil's endeavors to improve recovery of resources in mature fields are commendable. The company has operations in all of the major hydrocarbon-producing regions of the world, with an emphasis on the NCS. We believe that Statoil is well positioned to sustain its steady production growth for the next few years on the back of its large resource base at NCS.

Statoil carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks from the same space are Alon USA Partners, LP ALDW , Braskem S.A. BAK and ReneSola Ltd SOL . All these stocks sport a Zacks Rank #1 (Strong Buy).

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

RENESOLA LT-ADR (SOL): Free Stock Analysis Report

BRASKEM SA (BAK): Free Stock Analysis Report

ALON USA PTNRS (ALDW): 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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