Norwegian oil major Statoil ASA (STO) yesterday said that the company was the highest bidder on 21 tracts released in Minerals Management Service’s (MMS) US Gulf of Mexico (GoM) central area lease sale. Statoil’s winning bid is, however, subject to review and final approval by MMS. 

Statoil aims to acquire new acreages in areas where the company already has promising exploration leads. The lease sales are important events for the company to consolidate its assets portfolio

Production growth from international operations is a key component of the company’s overall annual upstream growth plans 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. GoM. 

In the past, Statoil had purchased EnCana’s (ECA) GoM assets, followed by the acquisition of those belonging to Anadarko (APC). These coupled with the bid-winning has made this region a core area for the company with significant long-term growth potential. 

However, Statoil’s reserve replacements have been relatively weak. Despite a number of major acquisitions, the company has not been able to meaningfully improve its reserve-replacement performance. We are currently Neutral on Statoil ADRs.
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