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Equinor (EQNR) Makes New Oil Discovery in Johan Castberg Field

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Equinor ASA EQNR made an oil discovery in the Skavl Sto 7220/8-3 exploration well, situated at the Johan Castberg field in the Barents Sea.

This is the company’s second hydrocarbon discovery in recent weeks near the Johan Castberg area. The 7220/8-3 well was drilled 5 kilometers southwest of the 7220/8-1 discovery well on the Johan Castberg field and 210 kilometers northwest of Hammerfest.

In March 2022, Equinor was awarded a drilling permit by the Norwegian authorities for the 7220/8-3 well in production license 532. Equinor is the operator of the production license 532, which was awarded in the 20th licensing round in 2009. Var Energi ASA and Petoro are the other license holders.

Notably, this is the 13th exploration well drilled in production license 532. Using the Transocean Enabler semi-submersible drilling rig, the well was drilled 352 meters below the water surface. It will be permanently plugged and abandoned now.

Based on preliminary estimates, the size of the latest discovery is estimated to hold 5-10 million barrels of recoverable oil equivalent. The discovery will further increase the profitability of Equinor’s Johan Castberg field. Equinor and the other licensees will consider tying the latest discovery to the Johan Castberg field.

With the latest discovery, the second exploration success of this year, Var Energi strengthened its position in the Barents Sea. The discovery supports the company’s long-term growth targets and adds valuable volumes to its resource base.

Equinor mentioned that the Skavl Sto would be further developed with Snofonn North and the previous discoveries of Skavl and Isflak.

Price Performance

Shares of Equinor have outperformed the industry in the past three months. The stock has gained 15.2% compared with the industry’s 12.6% growth.

Zacks Investment Research
Zacks Investment Research

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Zacks Rank & Other Stocks to Consider

Equinor currently flaunts a Zack Rank #1 (Strong Buy).

Investors interested in the energy sector might look at the following companies that also presently sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

PDC Energy, Inc. PDCE is an independent upstream operator that explores, develops and produces crude oil, natural gas and natural gas liquids. As of Mar 31, 2022, PDCE had $1.65 billion in total liquidity, while its credit facility currently has a total borrowing base of $3 billion. Thus, PDC Energy’s debt maturity profile is a favorable one.

PDC Energy’s cash flows will also receive some downside protection from oil and gas hedges. The company has hedged a portion of its 2022 oil production at attractive prices. At that price, PDCE’s hedges are expected to add robust positive value in revenues and considerably soften the blow if there is another meltdown in oil prices.

Enterprise Products Partners EPD is among the leading midstream energy players in North America. EPD is also well positioned to generate additional cash flow from under-construction growth capital projects worth $4.6 billion.

Enterprise Products Partners is strongly committed to returning cash to shareholders.  The partnership’s board of directors increased its cash distribution to 46.5 cents per unit, suggesting a 3.3% hike from the previous dividend of 45 cents.

Murphy USA Inc. MUSA is a leading independent retailer of motor fuel and convenience merchandise in the United States. On May 5, MUSA’s board of directors declared a quarterly cash dividend of 31 cents per share to its common shareholders of record on May 17. The payout represents a 7% sequential increase.

Murphy USA remains committed to returning excess cash to its shareholders through continued share buyback programs. As part of this initiative, the fuel retailer recently approved a new repurchase authorization of up to $1 billion, which will commence once the existing $500-million authorization expires and be completed by Dec 31, 2026. The move underscores MUSA’s sound financial position and commitment to rewarding its shareholders.

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