An endeavor to improve recovery in the mature fields, with an emphasis on the Norwegian Continental Shelf, has prompted Statoil ASA (STO) to boost its previously announced estimates for the North Sea oil discovery.
Earlier this month, Statoil made an oil discovery of high-impact on the Aldous Major South prospect in the North Sea along with its partners Petoro AS, Det Norske Oljeselskap ASA and Lundin Norway AS. It was estimated to hold approximately 200–400 million barrels of oil equivalent (MMBOE), with likely connectivity to the Avaldsnes discovery by Sweden's Lundin Petroleum.
However, Norway-based major international integrated oil and gas company Statoil has now doubled the projection for the prospect to 400–800 MMBOE.
Located west of Lundin’s Avaldsnes discovery, Aldous Major South is situated in license 265. Statoil has a 40% stake and retains the operatorship of the field. Petoro, Det Norske Oljeselskap ASA and Lundin hold 30%, 20% and 10% interests, respectively.
On the other hand, the Avaldsnes discovery is in license 501, which is operated by Lundin Petroleum with a 40% stake. Statoil holds 40% of the license while Denmark's A.P. Moller-Maersk A/S holds the remainder.
Notably, Statoil has confirmed that the two prospects ––Aldous Major South/Avaldsnes –– were indeed linked and are anticipated to jointly hold recoverable oil in the range of 500 MMBOE to 1.2 billion BOE, probably making it this year’s biggest oil discovery worldwide. Again, following the 250 million barrel Skrugard oil discovery in April and the 150–300 million barrel Peregrino South oil field, off the coast of Brazil, the duo symbolizes Statoil's third major discovery this year.
Although Statoil is facing production glitches of late, it is continuously shifting its focus to the still-unexplored areas of the Norwegian Sea, and intends to hit an equity production of above 2.5 MMBOE by 2020. We believe this recent discovery will boost its volume growth target significantly.
However, at this moment, our long-term Neutral recommendation remains unchanged, supported by a Zacks #3 Rank (short-term Hold rating). Statoil’s competitors include BP Plc (BP), Royal Dutch Shell plc (RDS.A) and Total SA (TOT).
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