Statoil ASA (STO) has set long-term growth goals for itself. The Norwegian company expects production to exceed 2.5 million barrels of oil equivalents per day in 2020 from 1.9 million barrels in 2010.
For the past ten years, Statoil’s production grew at a compound annual growth rate (CAGR) of 3% and is likely to remain unchanged over the next decade.
The company expects growth in three phases. The first phase (2010–2012) will yield at a CAGR of 3%, the second (2012–2016) between 2% and 3% and the third between 3% and 4%.
For 2011, Statoil reiterated its production guidance of 1.9 million barrels of oil equivalent per day (boed), which is the same as what it produced last year. However, management said that the year’s output could even see a decrease from that level.
The company’s solid base and portfolio of high return projects should help it in achieving its long-term target. Statoil enjoys a strategic position in Norwegian Continental Shelf (NCS), which is like to reap high yields of as much as 1.4 million boed by 2020.
The company expects the rest of its targeted output from its international portfolio. The company perceives three long-term business prospects on the NCS, namely the North Sea, the Norwegian Sea and the Barents Sea.
Statoil also benefits from offshore business groups in the Gulf of Mexico, Brazil, Angola, the Caspian region and Arctic outside the NCS. It expects to drill 20–25 high impact wells from 2011–2013. Moreover, Statoil has also taken significant positions in Sheringham Shoal and Dogger Bank projects in the UK.
Other recent discoveries made by Statoil are in both tracks of the Peregrino South well, directly adjacent to the Peregrino field offshore Brazil. The estimation of volume that can be recovered from Peregrino South is between 150 million and 300 million boe.
The company has also seen higher volumes at the Skrugard oil discovery (estimated at approximately 250 million boe recoverable resources) in the Barents Sea.
Statoil increased its investments for 2011 to $16 billion and expects to expend the same amount in 2012.
Statoil currently retains a Zacks #3 Rank which translates into a short-term Hold rating. For the long term, we retain our Neutral recommendation. Statoil competes with the likes of BP Plc (BP) and ConocoPhillips (COP).
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