Norwegian major Statoil ASA’s STO rig – COSL Pioneer – has been lying idle since Oct 2014. However, the company has failed to find another job for it over this duration.
COSL Pioneer is a DNV-GL class GM4000 design rig and was delivered in Aug 2011. The rig was mainly used in harsh environments in areas such as the North Sea and Norwegian Continental Shelf (NCS).
The rig was suspended from its last job about 13 months prior to the expiry date of Aug 2016 not due to the way it delivered but owing to oversupply in the rig portfolio. Notably, COSL Pioneer had demonstrated a good safety culture and provided efficient drilling operations.
Statoil’s endeavor to improve recovery of resources in mature fields is commendable. The company operates in all the major hydrocarbon-producing regions of the world, with special emphasis on the Norwegian Continental Shelf (NCS). We believe that Statoil is well positioned to sustain its steady production growth over the next few years on the back of its large resource base at NCS.
Recently, Statoil delivered strong exploration results. The company made significant additions to its resource base through several high impact discoveries. The latest finds gave the company access to new regions of Norway, Russia, Azerbaijan, Tanzania as well as Australia, thereby paving the way for long-term growth.
Statoil aims to achieve equity production of above 2.5 million barrels of oil equivalent in 2020. The growth is expected to come from new projects from 2014 to 2016 that would result in a compound annual growth rate (CAGR) of 2–3% over 2012–16. The second stream of projects is expected within 2016−20, which would likely lead to a CAGR of 3–4%. The state-controlled explorer intends to invest about $20 billion per year from 2014 to 2016, down 8% from earlier estimates. The lower investment plans reflect increased capital efficiency.
Statoil currently carries a Zacks Rank #2 (Buy). Other favorably-placed stocks from the same space are Transmontaigne Partners L.P. TLP, CNOOC Ltd. CEO and LRR Energy, L.P. LRE. All these stocks sport a Zacks Rank #1 (Strong Buy).
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