While Statoil ASA (STO) is fairly active on the exploration front with the start-up of operations in several new oil and gas fields, it is more positive on the production capacity of Snorre field on Tampen in the North Sea. The company anticipates a volume potential of approximately 900 million barrels of oil equivalents (MMBoe) for the next 30 years. Other relevant fields on Tampen are Statfjord and Gullfaks.
Statoil continues to concentrate on important fast-track development projects, which draw attention toward promising finds and prospects that have available capacity. Norne, Snorre, Katla and Sleipner are worth mentioning. The Snorre area is one of Statoil‘s priority regions for rapid expansion.
Among the fast-track development projects, PanPandora, Katla, Vigdis North-East and Gygrid form Statoil’s immediate focus.
On the Norwegian continental shelf, Snorre field with the second largest reserve base has the current reserve potential of 1.5 billion barrels. The activity level in the field is high, which ensures maximum utilization of resources in the coming years. Snorre platforms A and B constitute the fourth biggest oil producer in the Norwegian continental shelf.
Among the four fast-track projects in Statoil, Vigdis North-East aims to provide Snorre with additional resources from 2012. Moreover, the company and its partners on the Snorre field have decided to invest NOK 1.8 billion (approximately $0.29 billion) for a new pipeline between Snorre A and Snorre B. The pipeline will transport Snorre A oil to Statfjord B for storage and subsequently export to markets from 2012 onwards.
Norway-based Statoil is also making constant endeavors to develop other projects. Three new projects that are ready for fast-track development are Fossekall and Dompap, north of the Norne ship in the Norwegian Sea, and Vilje South close to the Marathon-operated Alvheim field in the northern part of the North Sea.
The company also remains focused on the standardization of equipment, which in turn is expected to reduce costs as well as time for production and development.
We appreciate Statoil’s efforts to shift its focus to the still unexplored areas of the Norwegian Sea and Barents Sea. These will add to the company’s volume growth prospects going forward. However, the Norwegian state’s concentrated ownership in the company significantly reduces the stock’s liquidity and attractiveness, relative to other European integrated names.
We maintain our Neutral recommendation on Statoil.
STATOIL ASA-ADR (STO): Free Stock Analysis Report
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