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Statoil, Total to Swap Barents Assets

Zacks Equity Research

Norwegian major Statoil ASA (STO) and France’s Total SA (TOT) have agreed to swap assets in the Barents Sea, subject to approval by the Norwegian Ministry of Petroleum and Energy. Per the agreement, Statoil will farm in 10% equity in production license (PL) 535 while Total will acquire 10% equity in PL 395 in exchange.

Situated on the Bjarmeland Platform in the central Barents Sea, PL 535 and PL 395, have gas resources about 20 kilometers apart proved by both the companies. The Ververis discovery in PL395 was made in 2008 while the Norvarg discovery in PL535 was made in 2011. There is also an ongoing appraisal well, Norvarg II, in PL535.

In Jul 2012, Norway's Petroleum and Energy Ministry had revealed that the Norvarg gas discovery had immense potential. The license partners expect the find to hold about 250 million barrels of oil equivalent. The Bjarmeland area has an attractive resource potential which is likely to become crucial for future gas developments in the Barents Sea.

Norvarg is located about 200 miles north of the isolated Norwegian coastal city of Hammerfest, which lies in the country's northernmost county of Finnmark in the Arctic circle and is the catalyst for current and future oil and gas exploration in the Barents Sea. The area containing the two discoveries is likely to assist in the ultimate development of the unexploited Barents Sea.

Per the Norwegian Petroleum Directorate's (NPD) website, prior to the asset swap deal, Total, the operator of PL 535, held 40%, while Det norske oljeselskap, North Energy, Valiant Petroleum and Rock Source Exploration possessed 20%, 20%, 13% and 7%, respectively.

The NPD database also confirmed that prior to the asset swap agreement, Statoil, the operator of PL395, held 50% while BG and Norwegian fellow state-owned group Petoro had 30% and 20%, respectively.

Statoil holds a Zacks Rank #3 (Hold). There are other stocks in the sector that appear rewarding. These include Dawson Geophysical Company (DWSN) and SM Energy Company (SM), which are expected to perform impressively over the next few months and carry a Zacks Rank #1 (Strong Buy).  

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