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Norwegian oil giant Statoil ASA (STO - Analyst Report) has found a large deposit of oil in the Flemish Pass Basin, offshore Newfoundland.

The oil was discovered in the Bay du Nord prospect in EL 1112. The field is situated about 500 kilometers north-east of St. John's, the capital of the Canadian province of Newfoundland and Labrador. The resource potential of the prospect is yet to be established.

The latest find is Statoil’s second offshore discovery in Newfoundland this year. The first was the discovery in the Harpoon prospect about 10 kilometers from Bay du Nords, in June.

The semi-submersible rig West Aquarius was used to drill both the Bay du Nord and the Harpoon wells to a water depth of about 1,100 meters. Statoil is the operator of Bay du Nord and Harpoon, with a 65% interest, while its partner Husky Energy holds the remaining 35%.

The Bay du Nord well is situated about 20 kilometers south of Statoil’s Mizzen discovery that produced positive results in 2010. The Mizzen discovery is estimated to hold recoverable reserves in the range of 100–200 million barrels of oil.

While the volumes of both Bay du Nord and Harpoon prospects are being assessed, Statoil is struggling to develop a better understanding of the geology and potential of the basin.

With plans of drilling about 50 exploration wells worldwide in 2013 and about 20 high impact wells between 2013 and 2015, Statoil will have new frontiers to explore. The new regions include the U.S. Gulf of Mexico, Australia and Brazil.

Statoil carries a Zacks Rank #5 (Strong Sell). However, there are other Zacks Ranked #1 (Strong Buy) sector stocks – Range Resources Corp. (RRC - Analyst Report), Susser Petroleum Partners LP (SUSP - Snapshot Report) and Dril-Quip, Inc. (DRQ - Analyst Report) – that appear attractive for the short term.

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