Statoil ASA (STO) has extended its existing service contract with AGR Field Operations by two more years. The extension has an estimated total value of NOK 40 million (approximately $6.8 million) over a period of 24 months.
Under the agreement, AGR will supply surface management services to 13 offshore installations and the Sture onshore terminal. Apart from the current extension, AGR is already involved with Statoil for the remaining 31 installations on the Norwegian continental shelf (NCS).
AGR Field Operations is the leading provider of engineering services and enhanced solutions to the oil and gas industry with more than 140 skilled and qualified employees within its maintenance management group. Hence, the deal will prove beneficial for both AGR Field Operations and Statoil across all their operations in the North Sea region.
Norway-based Statoil has been fairly active on the project development front and is gaining momentum with the start-up of operations on several new oil and gas fields. The company is also planning turnarounds on several oil and gas fields to improve recovery of resources in mature fields. The company’s endeavor on the standardization of equipment is expected to reduce costs as well as time for production and development.
Moreover, the company is also increasingly shifting its focus to the still unexplored areas of the Norwegian Sea and Barents Sea. All these efforts are likely to be accretive to the company’s volume growth going forward. Statoil expects its 2010 equity production to range between 1.925 and 1.975 million barrels of oil equivalent per day. Capital expenditures for this year are expected to be around $13 billion.
We have a Zacks #3 Rank (short-term Hold recommendation) on Statoil shares. We also reiterate our long-term Neutral rating.
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