Statoil ASA (STO) has made another trivial hydrocarbon discovery, making it the third one near the prospective Gullfaks South area in the North Sea, following the earlier Rutil and Opal finds.
The Norwegian oil and gas company completed exploration wells – 34/10-52 A and B – in its production license 50 in the neighborhood of its Gullfaks South field in the North Sea off Norway. Semi-submersible Deepsea Atlantic drilled the wells that were proposed to prove oil in Middle Jurassic reservoir rocks of the Brent group and were also intended to elucidate communication with the producing Gullfaks South structures.
According to the preliminary approximation, the discovery in production license 50 holds between 0.5 and 1.5 million cubic meters of recoverable oil equivalent. Hydrocarbon deposits were observed in the upper part of the Brent group along both well paths in the license, which is operated by Statoil with 70% interest while the Norwegian state-owned company Petoro AS owns the remaining 30%.
The latest discovery demonstrates Statoil’s relentless endeavor to reinvigorate recovery in the mature fields, with an emphasis on the Norwegian Continental Shelf (NCS).
Recently, the company’s North Sea oil discovery received yet another shot in the arm. 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), which has been doubled to 400–800 MMBOE.
Although the volumes of the current find are meek compared with the significant discoveries off Norway earlier, it nevertheless emphasizes the viability of the prospective NCS production life. Statoil is facing production glitches of late and is continuously shifting its focus to the still unexplored areas of the Norwegian Sea, projecting an equity production of above 2.5 MMBOE by 2020.
Our long-term Neutral recommendation on Statoil 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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