Norwegian oil and gas firm, Statoil ASA (STO) has entered into an agreement to farm out 5% of its participating interest in Eni SpA (E) operated block 15/06 offshore Angola to Sonangol, Angola's national oil and gas company.
The transaction effective Jan 1, 2013, is valued at $200 million and likely to close within six months. The announcement follows shortly after Total SA (TOT) divested a 15% stake in the same block.
The aforementioned deal is part of Statoil’s strategy to capitalize on its core assets through continued optimization by maximizing value and focusing on financial as well as organizational capabilities. The company aims to spend more capital and increase financial flexibility, going forward.
Located 350 kilometers northwest of Luanda, block 15/06 spans nearly 3,000 square kilometer with a water depth of 220 meters to 1,700 meters. In 2013, Angolan assets produced about 200,000 barrels of oil per day. The Angolan continental shelf is the largest contributor to Statoil’s oil production outside Norway and forms a major part in Statoil’s international production.
Statoil also holds interests in several other Angolan licenses including exploration blocks in the Kwanza basin. Earlier in 2014, Statoil had stated its intention to emphasize on value over volumes. In consistence with this, the company reduced its planned capital expenditure by 8% a year through 2016. This has pushed its former output target of 2.5 million barrels a day by three to four years to 2020.
In recent times, Statoil has delivered strong exploration results, adding significantly to its resource base by making several high impact discoveries. The latest finds have given the company access to new regions of Norway, Russia, Azerbaijan, Tanzania and Australia. These have strengthened the company’s position and made way for long-term growth.
At present, Statoil carries a Zacks Rank #3 (Hold). Another oil and gas stock worth mentioning is Encana Corp. (ECA), which sports a Zacks Rank #1 (Strong Buy).