Statoil ASA (STO), Norway-based major international oil integrated, intends to recover 4.2 billion barrels of oil equivalent in the coming years. The company said this a week after a commission appointed by the Norwegian government stated that oil firms could recover an additional 15.7 billion barrels of oil from off Norway fields.
 
The government said in a statement that less than half of the total hydrocarbon found in the region off Norway will be recoverable if oil companies have not put their efforts to recover more from the reservoir.
 
To increase the recovery level in offshore Norway, which is already among the highest in the world for offshore drilling, a substantial amount of investment is required. Though the company has not mentioned any specific amount of investment, it is looking forward to an extra 675 million cubic meters of oil equivalent in the coming months.
 
In March, Statoil said that it will invest NOK 20 billion ($3.41 billion) for further development of Norway’s largest gas field, Troll. The development includes more wells and pipelines. The company also said that the main purpose of this investment is to increase oil production from this field. Management is targeting an oil recovery rate of 50% by 2020 from the current 39%.
 
Amid Statoil’s initiatives in international resources, the company is increasingly shifting its focus on the still unexplored areas of the Norwegian Sea and Barents Sea. These will enhance the company’s volume growth prospects going forward. Given cost containment associated with some of the key growth projects is a long-term challenge, we prefer to stay on the sidelines with a Neutral recommendation (Zacks #3 Rank – Hold) for Statoil.
 
STATOIL ASA-ADR (STO): Free Stock Analysis Report
 
Zacks Investment Research