After drilling an appraisal well in the northeastern segment of the Smorbukk deposit (part of the Asgard field in the Norwegian Sea), StatoilHydro (STO) has confirmed the existence of oil, gas and condensate.
The result is encouraging, and development in association with the Asgard B platform will be considered. The company said that production may start in three to four years. The proven resources are estimated to be between 15 and 25 million barrels of recoverable oil equivalent.
The Asgard field development includes 58 production and injection wells divided on 16 subsea templates. Two vessels and one platform are located on the field. Discovered in 1984, the Smorbukk field has been on stream since 1999.
As of year-end 2008, StatoilHydro had approximately 5.58 billion oil-equivalent barrels in proved reserves. It is the operator of 39 producing oil and gas fields, and accounts for 60% of all Norwegian petroleum production. Due to its strong offshore exposure, Statoil has been a leader in subsea production.
We continue to believe that the positives in the Statoil story – strong finances and a relatively improved asset base following the Norsk Hydro acquisition – are more than offset by its substantial exposure to the mature and high-cost Norwegian Continental Shelf (NCS) basin.
Despite the maturity of the NCS region, StatoilHydro is well positioned to sustain its production from this area at current levels for the next few years. Internationally, Statoil plans to continue pursuing a high level of exploration activity to develop the company’s resource base.
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. Production growth from international operations is a key component of the company’s overall annual upstream growth plan over the next few years. Consequently, we recommend an Outperform rating for the stock.
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