Norway-based Statoil ASA (STO), a major international integrated oil and gas company, agreed to acquire an additional 20.67% stake of Nautical Petroleum Plc, in license P355, Block 9/11a of the Mariner field.
Statoil will pay £87.5 million (approximately $137 million) for the interest in the field and associated rights. Additionally, Nautical will also receive up to £3 million in costs from the Norwegian producer, till the final investment decision is reached in about two years. The transaction is pending approval from the joint venture partners as well as the Department of Energy and Climate Change.
Upon completion of the agreement, Statoil will enjoy 65.1% interest and operatorship in Mariner, while Nautical will retain its 6% interest. The increased ownership in Mariner, together with its 81.6% interest in Bressay field, allows the company a strong position in offshore oil fields and boosts its international growth strategy.
In late 2007, Statoil acquired Mariner and Bressay fields and became their operator. The company has already completed drilling and testing one appraisal well at Bressay as well as executed two seismic operations at Mariner, since the acquisition, confirming material volumes in the area.
The fields are expected to have approximately 450 million barrels of recoverable resources. The company expects to commence production in 2015 with a daily capacity of 55,000 barrels of oil.
Statoil holds a vast interest in Norway’s oil and gas production but is in constant endeavor to expand its perimeters abroad owing to the declining domestic output. With more than 35 years of oil and gas production experience, Statoil is engaged in an array of activities related to energy production and oil and gas sales in the U.K.
Moreover, Statoil holds interests in three other oil and gas production fields, namely, Alba, Schiehallion and Jupiter. It also holds interest in several exploration licenses including the Rosebank, Tobermory, Amos and Suilven discoveries.
Despite a number of major acquisitions, Statoil has not been able to meaningfully improve its reserve-replacement performance or reach beyond 100% since 2005. This year, Statoil divested its Brazilian Peregrino field interest to China’s Sinochem Group for $3.07 billion and raised $2 billion in a bond sale in order to boost its financial flexibility.
With an expectation that the stock will perform in line with the broader equity market, we have a Zacks #3 Rank (short-term ‘Hold’ recommendation) and maintain a long-term Neutral recommendation on Statoil shares.
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