Norway-based oil major Statoil ASA (STO) said that it has been awarded two large exploration blocks in the Baffin Baybid program in West Greenland. Other partners in this joint venture are Royal Dutch Shell (RDS.A) and GDF Suez.
Shell will enjoy the operatorship in these blocks (Blocks 5 & 8). But Greenland’s national oil company, Nunaoil would have an interest during the exploration phase. While Block 5 covers an area of 9991 square kilometres, Block 8 comprises 10,618 square kilometres.
Although early access to such frontier opportunities entails more uncertainties related to probability of discovery, Statoil management believes the potential reward of one or more sizeable discoveries may be high.
Production growth from international operations is a key component of Statoil’s overall annual upstream growth plan over the next few years. The company has a growing upstream presence in the emerging basins of the Caspian Sea, West Africa and the deepwaters of the U.S. Gulf of Mexico.
Statoil continues to maintain a high activity level in Norwayas well. The company is planning to install subsea gas compressors to boost output and prolong production-life at the Aasgard field in the Norwegian Sea.
Although uncertainties remain, we are optimistic on Statoil’s ability to develop the project successfully. The company will also capitalize on its 40-year experience in marine operations in the offshore sector.
While the company is still exploring various domestic as well as international resources for upstream growth, its recent entry in the Eagle Ford Shale play through a joint venture with Talisman is appreciable.
Statoil holds a Zacks #3 Rank (short-term Hold rating). Our Neutral recommendation remains unchanged for the company.
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