Statoil, Talisman Energy Drop Eagle Ford Sale Plan on Lower Bids - Analyst Blog

Norwegian major Statoil ASA ( STO ) and Talisman Energy Inc. ( TLM ) have put an end to the attempt to divest their joint venture (JV) in Texas's Eagle Ford basin. The move followed when bids came in below expectations, as per sources acquainted with the matter.

Both the parties were expecting to raise about $4 billion for the 50-50 partnership. Large exploration companies that were looking to purchase oil-producing properties were anticipated to show interest in these assets.

However, the offers came in lower than expected owing to the reason that the venture produces mainly light condensate or ultralight oil. Condensate is not preferred by some producers as its value is lesser than that of crude oil.

According to Statoil's 2013 annual report, the company took over operations of the eastern part of the JV last year. This region yields 27,700 barrels of oil equivalent per day.

In recent times, Statoil has delivered strong exploration results, adding significantly to its resource base by making several high impact discoveries. The latest finds give the company access to new regions of Norway, Russia, Azerbaijan, Tanzania and Australia. These strengthen the company's position and pave the way for long-term growth.

Statoil aims to achieve an equity production of above 2.5 million barrels of oil equivalent in 2020. The growth is expected to come from new projects from 2014 to 2016 that would result in a compound annual growth rate (CAGR) of 2% to 3% for the period 2012 to 2016. The second stream of projects is expected within the 2016−2020 period that would likely lead to a CAGR of 3% to 4%.

Currently, Statoil carries a Zacks Rank #2 (Buy). Meanwhile, one could consider better-ranked players in the same sector like Magellan Midstream Partners L.P ( MMP ) and EQT Corp. ( EQT ), both of which sport a Zacks Rank #1 (Strong Buy).

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

TALISMAN ENERGY (TLM): Free Stock Analysis Report

MAGELLAN MDSTRM (MMP): Free Stock Analysis Report

EQT CORP (EQT): 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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