Statoil ASA (STO) announced that along with its partners, it will continue to evaluate and optimize the field development concept in the Johan Sverdrup field in the North Sea. The final decision regarding concept selection will be made early in 2014. The resource estimate for the field is between 1.8–2.9 billion barrels of oil equivalent.
The company plans to get development and operation approved during the Norwegian Parliament's spring session of 2015. Production start-up is expected at the end of 2019. Statoil plans to export oil from its Johan Sverdrup field in the North Sea from Mongstad.
For this the export solution includes a separate 175-mile pipeline from Johan Sverdrup, landing of pipeline and an onshore route, as well as terminal modifications for Mongstad, which is subject to the final concept solution for Johan Sverdrup. Decisions regarding development and finance are expected later this year.
The company took into consideration development costs, technical viability and plan risk. The decision was also based on an overall appraisal of health, safety and environment elements.
This proposal was in sync with Statoil’s aim of ensuring that the terminal activity results in profitable oil value chains at Mongstad. The recommendation was the best solution possible for Johan Sverdrup and is not connected with where the oil is refined. All these factors will facilitate good use of resources and higher infrastructure flexibility that will guarantee a competitive landing of oil from existing and new fields on the Norwegian Continental Shelf.
Going forward, Statoil expects to grow its yield by 19% to over 2.5 million barrels per day by 2020 from 2.1 million barrels per day (bpd) currently. The majority of this growth is expected from the U.S., with production projected to increase nearly three times to around 500,000 barrels per day from 150,000 bpd now. The first quarter of 2013 saw growth of nearly 75% from the prior-year quarter. This shows that the company is moving in line with its goal of reaching over 500,000 barrels of oil equivalent per day.
Statoil carries a Zacks Rank #4 (Sell). However, there are other better ranked stocks in the oil and gas sector – Pacific Drilling S.A. (PACD), Harvest Natural Resources Inc. (HNR) and Abraxas Petroleum Corp. (AXAS) – which hold a Zacks Rank #1 (Strong Buy) and are good investment options.
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