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Equinor Discovers Light Oil in Barents Sea on Second Try

Zacks Equity Research

Equinor ASA EQNR recently announced the discovery of oil in the Sputnik exploration well, located in the Barents Sea, around 30 kilometres North East of the Wisting finding. The company witnessed an oil column of 15 meters in the Triassic sandstone reservoir in the PL855 license, with samples comprising both light oil and water.

The company’s initial estimate of recoverable resources from the discovery is currently in the range of 20-65 million barrels of oil. Finding oil in the well is expected to encourage Equinor as it has acquired a strong acreage position in the region, which has a complex geology. However, the commerciality of oil extraction from the discovery is yet to be determined.

Notably, Gemini Nord was the first well drilled by the company in the PL855 license in 2017. The reservoir channel system found back then with uncommercial oil deposits was smaller than the recent discovery. The Sputnik exploration well has a vertical depth of 1569 metres under the seabed. The company used Seadrill’s sixth generation ultra-deepwater semi-submersible drilling rig, namely West Hercules, at the site.

Operator Equinor owns a 55% stake in the PL855 license, while partners OMV of Austria and Norwegian state-run Petoro hold 25% and 20% interest, respectively.

In another development, Equinor recently closed the $965-million acquisition of a 22.45% additional stake in the U.S. Gulf of Mexico’s (GoM) Caesar Tonga oilfield from Royal Dutch Shell plc RDS.A. Located 290 kilometers southwest of New Orleans, the oilfield — which came online in early 2012 — is one of the biggest deepwater resources in the prolific GoM.The acquisition boosts the company’s footprint in the productive basin and increase its interest in the oilfield, from 23.55% to 46%.

Price Performance

Equinor has lost 21% year to date compared with 2.2% collective decline of the industry it belongs to.

Zacks Rank and Stocks to Consider

Currently, Equinor carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy sector are given below:

NuStar Energy L.P. NS is one of the largest independent liquids terminal and pipeline operators in the United States. Its third-quarter earnings per unit are expected to surge more than 100% year over year. It has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Pembina Pipeline Corp. PBA operates as an energy transportation and service provider. Its full-year 2019 earnings per unit are expected to grow more than 15% year over year. The company has a Zacks Rank #2 (Buy).

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NuStar Energy L.P. (NS) : Free Stock Analysis Report
 
Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
 
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Statoil ASA (EQNR) : Free Stock Analysis Report
 
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