Norway-based oil group Statoil ASA (STO) announced that it will acquire three offshore exploration licenses in Indonesia. The purchase prices of the stakes were not disclosed.
Per the deal, Statoil will buy a 40% equity interest in North Makassar Strait Production Sharing Contract (PSC) as well as similar interests in two added offshore PSCs –– West Papua IV and Halmahera-Kofiau. All three contracts will be operated by Niko Resources Ltd.
Given its exploration success, Statoil has the option to become the operator in the development and production phases. The agreement, however, is pending the Indonesian government’s approval.
Statoil already holds operational rights in the Karama offshore PSC in Indonesia and is a partner in the neighboring Kuma PSC in Makassar Strait. Both fields are slated to start drilling in 2011.
Management remains highly optimistic about this addition to its asset base that strengthens the company’s global foothold.
Statoil is a major international integrated oil and gas firm, with strong focus on the Norwegian Continental Shelf (NCS). As of year-end 2010, the company had approximately 5.33 billion oil-equivalent barrels in proved reserves.
We appreciate Statoil’s endeavor to obtain drilling acreages worldwide and believes that it remains favorably positioned to sustain its steady production growth for the next few years.
However, unstable oil and gas prices along with competition from peers, such as BP plc (BP), Total SA (TOT) and Royal Dutch Shell plc (RDS.A) keep us cautious on the stock.
We are maintaining our long-term Neutral recommendation on the stock. Statoil currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
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