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Norwegian major Statoil ASA (STO - Analyst Report), along with its partners Eni SpA (E - Analyst Report) and Petoro, have pushed back a decision on the development concept for its flagship $15.5 billion Johan Castberg Arctic oil project till the summer of 2015. The move came after a disappointing drilling campaign.

The Johan Castberg project includes two of Statoil operated discoveries, Skrugard and Havis, which became a breakthrough for the Barents Sea as a new oil province. The proven volume in the license is estimated to be 400–600 million barrels of oil.  

Statoil, which operates the license with a 50% stake, has performed an extensive exploration campaign with the aim to establish additional resources that could make Johan Castberg feasible for an expanded infrastructure in the region. The exploration campaign that lasted over 12 months involved a total of five wells at multiple reservoir depths. However, the oil derived was less than expected.

Earlier, Statoil had been pondering over two options for the field’s development. The first was the construction of a pipeline to carry oil to an onshore terminal, or having a floating production storage and offloading (FPSO) facility. The second option is comparatively cheaper and Statoil considers it to be more appropriate. However, the first option would offer opportunities to tie in other discoveries in the area.

The partners intend to concentrate on three main areas to provide the best decision relating to the new concept selection. The three aspects include technical development solution, assessment of the viability of an oil terminal at Veidnes, and update of the resource basis and cost control.

Currently, Statoil sports a Zacks Rank #1 (Strong Buy). Investors interested in the same sector could consider stocks like Encana Corp (ECA - Analyst Report) and EQT Corp. (EQT - Analyst Report), all of which have a Zacks Rank #1.

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