Norwegian major Statoil ASA’s STO exploration well Mdalasini-1 has led to a new natural gas finding offshore Tanzania. The company’s share price, however, has been trending downward post-announcement and has declined by 1.5%.
The detection of an extra 1.0–1.8 trillion cubic feet (tcf) of natural gas in place in the Mdalasini-1 well has taken the total of in-place volumes to about 22 tcf in Block 2.
Located in a water depth of 2,296 meter at the southernmost edge of the block, the new gas discovery in Mdalasini-1 well has been made in Tertiary and Cretaceous sandstones.
The first phase of the multi-well exploration program offshore Tanzania has come to an end with the Mdalasini-1 discovery. Since the initiation of the program in Feb 2012, the company has drilled 13 wells and made eight discoveries, including Mdalasini-1. The area is deemed to hold further opportunities. But with the appraisal of Tangawizi-1 high-impact discovery in Mar 2013, the drilling activities will be halted for some time in order to assess the next steps and to mature new possibilities.
Mdalasini-1 well was drilled by Statoil with a 100% working interest. Earlier, Statoil together with co-venturer ExxonMobil Corp. XOM made seven discoveries in Block 2. It comprised the five high-impact gas discoveries Zafarani-1, Lavani-1, Tangawizi-1, Mronge-1 and Piri-1 as well as the discoveries in Lavani-2 and Gilligiliani-1.
The license on Block 2 is operated by Statoil on behalf of Tanzania Petroleum Development Corp. (“TPDC”) with a 65% working interest. The remaining 35% is held by ExxonMobil Exploration and Production Tanzania Ltd. During the development phase, TPDC has the right to a 10% working interest.
Statoil’s presence in Tanzania dates back to 2007 when it was awarded the operatorship for Block 2.
Statoil currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks from the oil and gas sector include Valero Energy Partners L.P. VLP and Western Gas Equity Partners, L.P WGP. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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