Norwegian oil major Statoil ASA (STO) has increased its interest in the St Malo development region. St Malo is a major discovery in the ultra-deep waters of the Gulf of Mexico (GoM).

Statoil has exercised its preferential rights on a proposed sale of Devon Energy‘s (DVN) interest in the development. Following the deal, Statoil’s interest stood at 21.5%.

St Malo is operated by Union Oil Company of California, a subsidiary of Chevron Corporation (CVX). The St Malo discovery, commonly known as the Paleogene play, is in the lower tertiary trend of the deepwater GoM. Statoil is the third-largest stakeholder in this play.

Due to its strong offshore exposure, Statoil is a leader in subsea production. It brings in technology and extensive offshore expertise, which will benefit the development of this play.

Production growth from international operations is a key component of Statoil’s overall annual upstream growth plans over the next few years, and an increase in St Malo working interest coincides with these plans. Apart from the GoM, the company has a growing upstream presence in the emerging basins of the Caspian Sea and West Africa.

We are currently Neutral on Statoil and view the company as a stable and secure source of energy in a global oil patch. Statoil remains focused on improving ROCE (returns on capital employed) by maintaining disciplined capital outlays and reducing operating costs.

“STO” Free Stock Analysis: Buy? Sell? Hold?
“DVN” Free Stock Analysis: Buy? Sell? Hold?
“CVX” Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research