Back to top

Analyst Blog

Norwegian oil giant Statoil ASA (STO - Analyst Report) has inked an agreement with Russian state-owned oil company Rosneft to complete its earlier co-operation deal that encompasses exploration of the Kashevarovsky, Lisyansky and Magadan-1 licenses in the Sea of Okhotsk north of Sakhalin Island and the Perseevsky license in the Barents Sea. The co-operation deal was signed in May 2012.

Statoil, with a 33.33% stake of 33.33% in the joint venture, will be liable to fund the majority of exploration costs on an offshore acreage of about 102,000 square kilometers. Rosneft will hold the remaining 66.67% and will pay back its share of exploration costs from the future production at commercial discoveries.

Per the requirement of the license, Statoil will need to drill 6 exploration wells during the period from 2016 to 2021 and will carry the cost of exploration activities necessary to establish the commercial value of the licenses.

Recently, both the companies signed a heads of agreement for the joint pilot development of Domanik shale formations in 12 licenses in the Samara region. Rosneft will hold the majority stake of 51% in the project and Statoil will have a stake of 49%. According to the terms of the agreement, Statoil will provide carry-based financing of about $60 million for a pilot survey program as well as technology to explore the shale play.

Earlier this month, Statoil was awarded interests in production license 713 and six other licenses in the Barents Sea in the twenty-second licensing round on the Norwegian Continental Shelf. PL 713 spans 1,213 square kilometers and lies adjacent to the recently discovered Johan Castberg field.

These licenses, which are considered to be of high priority in this round, have solidified the company’s position in the region and formed a solid foundation for further growth.

Moreover, Statoil’s close co-operation with Rosneft both in the Norwegian and Russian parts of the Barents Sea will help in leveraging the combined experience of operating in extreme environments of both the companies. Statoil will also continue to work with Italian explorer, Eni SpA (E - Analyst Report) – its long-standing partner in the area.

Statoil carries a Zacks Rank #4 (Sell). However, there are other Zacks Ranked #1 (Strong Buy) stocks – Newpark Resources Inc. (NR - Snapshot Report) and Gulfmark Offshore, Inc. (GLF - Snapshot Report) – that are expected to perform impressively over the short term.
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
PLANAR SYST… PLNR 4.42 +4.74%
BITAUTO HOL… BITA 81.38 +4.70%
CHINA BIOLO… CBPO 47.65 +2.74%
GILEAD SCIE… GILD 104.95 +2.58%
SPIRIT AIRL… SAVE 72.75 +2.32%