Norwegian oil and gas company, Statoil ASA’s (STO) share price surprisingly fell 0.6% in the first trading session following the news that the company, along with its co-venturer ExxonMobil Corporation (XOM) hit gas in the Piri prospect in Block 2 offshore Tanzania. However, Statoil’s share price jumped 0.5% and 0.3%, respectively, in the next two sessions to touch $31.91 per share on Jun 23.
The Piri prospect is estimated to hold two to three trillion cubic feet (Tcf) of natural gas in place. It is the sixth discovery of Statoil and ExxonMobil, and the fifth high-impact discovery in Block 2 offshore Tanzania. The latest find has taken the total volumes in place to about 20 Tcf in Block 2.
Located 2 kilometers southwest of the Lavani-1 well in a water depth of 2,360 meters, the Piri well was found in the same Lower Cretaceous sandstones as the gas discovery in the Zafarani-1 well drilled in 2012.
Other high-impact gas discoveries that were made before Piri in Block 2 are Zafarani-1, Lavani-1, Tangawizi-1 and Mronge-1, and a discovery in Lavani-2.
Piri 1 was drilled by the drillship Discoverer Americas, which is currently drilling the Binzari prospect in Block 2. Block 2 has been projected to have further opportunities that will be outlined and tested throughout 2014 and 2015.
Statoil operates the license on Block 2 on behalf of Tanzania Petroleum Development Corporation (TPDC) with a working interest of 65%, while ExxonMobil Exploration and Production Tanzania Limited owns 35%.
Statoil’s presence in Tanzania dates back to 2007, when it was awarded the operatorship for Block 2. Statoil and ExxonMobil continue to strengthen the partnership and recently made a joint effort to develop an offshore block in Tanzania.
Currently, Statoil carries a Zacks Rank #2 (Buy). Other stocks worth considering in the same sector include Encana Corp (ECA) and Ultra Petroleum Corp. (UPL), all of which sport a Zacks Rank #1 (Strong Buy).
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