Norwegian major Statoil ASA’s (STO) share price dropped by 0.4% and 0.1% respectively, for two consecutive trading sessions after it announced the results from its first drill stem test in the Tanzania Block 2 offshore discoveries that was partnered by ExxonMobil Corporation (XOM). However, after a rise of 1.1% in the third trading session, the share price closed at $27.17.
The Zafarani-2 operation appraised through two separate intervals. During the test, which was restricted by equipment, gas flowed at a maximum average daily rate of 66 million standard cubic feet. The appraisal proved good reservoir quality and connectivity.
Performed in a water depth of 2,400 meters and about 80 kilometers off the coast of southern Tanzania, the drill stem test operation, was carried out through a re-entry in the Zafarani-2 well.
The data obtained through these tests will aid in reducing technical uncertainties in a potential future Tanzania offshore as well as LNG development.
It is believed that the production well rate potential is higher than the rates obtained during the equipment constrained test. The planned appraisal in the Zafarani reservoir will conclude with the completion of the Zafarani-2 operation followed by the appraisal of Zafarani-3 well. This forms the basis of field development in Tanzania Block 2.
The Zafarani-2 well test announcement was preceded by the Mronge-1 discovery made in Dec 2013. This represented the fifth discovery in Block 2 that brought the natural gas in place volumes upto 17-20 trillion cubic feet.
Statoil operates the license on Block 2 on behalf of Tanzania Petroleum Development Corporation, with a working interest of 65%. The remaining 35% is held by ExxonMobil Exploration and Production Tanzania Limited.
Staoil currently holds a Zacks Rank #3 (Hold). Other stocks in the oil and gas sector such as Helmerich & Payne, Inc. (HP) and Patterson-UTI Energy Inc. (PTEN) with a Zacks Rank #1 (Strong Buy) are expected to outperform.
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