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Statoil Wins NPD Nod for 16/2-12

Zacks Equity Research

Statoil Petroleum AS, a wholly owned operating subsidiary of Statoil ASA (STO), has won a drilling approval from the Norwegian Petroleum Directorate (NPD) for an exploration well at the Geitungen prospect near the Johan Sverdrup field.

In approximately 115 meters of water on the Draupne formation, located between Espevaer and Aldous Major North, the company will perform its drilling operation for well 16/2-12 from the Ocean Vanguard drilling facility.

The program includes the drilling of a wildcat well in production license 265 in about 3 miles (5 kilometers) northeast of well 16/2-10 in the central part of the North Sea. This latest well is the eighth of its kind to be drilled in license 265 that was awarded on April 2001.

Statoil enjoys the operatorship interest of 40% and the other licensees include Petoro AS with 30%, Det Norske Oljeselskap ASA with 20% and Lundin Norway AS with a 10% stake.

Meanwhile, Statoil is shutting down four oil platforms in the North Sea owing to the ongoing strike by oil workers. The strike, which initiated on June 24, has resulted in the complete shut down on the world's eighth biggest oil exporter’s Oseberg and Heidrun fields in the North Sea and its Tjeldbergooden industrial complex in mid-Norway. Oseberg constitutes a vital oil field as crude oil generated from it forms part of the Brent Index.

The company said that its operations at the Huldra, the Brage, the Veslefrikk A and B, and the Oseberg C platforms -- which are tied to the Oseberg field center in the North Sea -- will also be completely disrupted. This would result production loss of 52,000 barrels of oil and 2.8 million cubic feet of gas each day.

The Norwegian Oil Industry Association also added that the transportation of oil and gas from the adjoining fields will be ceased as the workers at the Oseberg field centre are on strike.

Located 87 miles (140 kilometers) northwest of the city of Bergen, Oseberg is an offshore oil field in the North Sea that remains operated by Statoil — the world’s largest offshore operator. On the other hand, the oil and gas field Heidrun is located 109 miles (175 kilometers) west of Kristiansund.

Skarv field, lying 22 miles (35 kilometers) north of the Norne field and 28 miles (45 kilometers) south of the Heidrun field, was also affected and hence production start-up plans for autumn might get postponed. 

While the company is fairly active in its development operations, its rising production costs and a higher capex remain our concerns. Additionally, Statoil’s performance will likely be affected by the volatile macro environment, fluctuating oil and natural gas prices and geo-political disturbances.

Considering these factors, we remain Neutral on Statoil for the long term. The company, which competes with Eni SpA (E), also holds a Zacks #3 Rank, which is equivalent to a short-term Hold rating.

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