Statoil Sheds Camanu-Almada Acres (COP) (STO) (TOT)

Zacks

The Norwegian state-owned oil giant Statoil ASA (STO) is divesting a portion of its participating interests in blocks located offshore Brazil in the Camanu-Almada basin. The transaction awaits the consent of Brazilian authorities and is subject to various conditions on closing.

The buyer, South America-focused Gran Tierra Energy Inc., will get a 10% working interest in Petrobras-operated BM-CAL-7 and a 15% working interest in Statoil-operated BM-CAL-10, in the Camamu-Almada Basin. Multiple identifications of leads and prospects have been made on these exploration licenses. An exploratory well is slated for drilling on BM-CAL-10 later this year.

Statoil has 40% equity in the BK-CAL-7 license, while Petrobas, the operator holds the remaining 60%. Statoil is the operator of BM-CAL-10 with a 60% interest whereas Petrobas has a 40% stake. BM-CAL-7 spreads over an area of 1362 square kilometers (336,558 acres), with BM-CAL-10 covering 1680 square kilometers (415,137 acres). Water depths between the two plays range from 400 meters to 2800 meters.

Per the pact, Gran Tierra Energy will remain the non-operating partner and its 2011 budget impact is estimated to be $17 million. It will need to pay its share of costs as a participant incurred on the licenses and on drilling of the first exploration well relating to these two. Additional amounts may also have to be paid if the outcome of first exploration well results in a discovery and in the event of future development.

Camamu-Almada is situated immediately south and offshore Reconcavo basin, where Canada based Gran Tierra Energy operates four blocks and is soon expected to commence development and exploration drilling.

As an endeavor to constantly review its portfolio and make adjustments in order to reduce portfolio risk, the company carried out the above transaction.

Statoil has a Zacks #3 Rank implying a Hold rating for a period of one to three months. We recommend a Neutral rating on the stock for the long term. Total S.A (TOT) and ConocoPhillips (COP) are major competitors of Statoil.

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