Norwegian operator Statoil ASA ( STO ) has come across a huge gas and condensate deposit at the King Lear prospect in the southern part of the Norwegian North Sea.
According to the company, the exploration well 2/4-21 (in the upper Jurassic sandstone in the Farsund formation) has a proven gas and condensate column of 48 meters, while a subsequent sidetrack well -- 2/4-21A -- has a gas and condensate column of 70 meters. The King Lear prospect, drilled by the jackup rig Maersk Gallant, is estimated to hold total recoverable reserves of 70 million to 200 million barrels of oil equivalent.
Wells 2/4-21 and 2/4-21A signify the eleventh and twelfth wells spud in production licenses PL 146 and PL333. Statoil, as the operator of licenses PL146 and PL333, holds 77.8% share while its French partner Total SA ( TOT ) has an interest of 22.2%.
Statoil intends optimum development at the King Lear prospect since it is characterized by high pressure and high temperature. The company is evaluating between stand-alone development or a tie-in (with the existing infrastructure in the area) for development of the discovery. Currently, Statoil is working on data collection for the sidetrack.
The King Lear prospect provides a major breakthrough for revitalizing the Norwegian Continental Shelf (NCS) -- the origin of the commercial oil find in Norway. An interesting fact for the investors is that this part of NCS still has the potential to yield, with the company proposing for appraisal drilling of the find along with exploration drilling on additional attractive prospects in the licenses.
Among the string of discoveries made by Statoil over the last 15 months, the King Lear discovery represents the eight high impact find. This goes to show the company's steady focus on achieving success in high impact prospects and expanding its operations worldwide. The King Lear discovery follows other high impact finds in mature regions of the Tanzania (Lavani well), North Sea (Johan Sverdrup), the Barents Sea (Skrugard and Havis,) Tanzania (Zafarani) and Brazil (Peregrino South and Pão de Açúcar).
Statoil holds a Zacks #3 Rank (Short term Hold rating). Longer term, we maintain our Neutral rating on the stock.