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Norwegian oil giant Statoil ASA (STO - Analyst Report) has awarded Schlumberger Limited (SLB - Analyst Report) a contract worth approximately NOK 1.15 billion ($240 million) spanning a period of two years. It entails providing integrated drilling services for the licenses — Gullfaks, Gullfaks Satellites, Snorre, Statfjord, Tordis/Vigdis, Visund in the Norwegian Continental Shelf (NCS).

The contract, effective Sep 1, 2014, also includes exploration drilling in the NCS and has three optional extensions, each for two years. Over the next two years, the contract will generate employment for about 350 people in Schlumberger.

The agreement also covers services such as delivery of directional drilling, measurement while drilling (MWD), logging while drilling (LWD) and mud logging services. Moreover, Schlumberger will provide RT data transfer, integrated operations/onshore support, drilling optimization and drilling equipment.

Statoil awarded the contract to Schlumberger as it provided the best combined technical and commercial offer. Continuous partnership between the two companies will be vital in fully exploiting Schlumberger’s technical and operational expertise.

The contract model guarantees access to key drilling technologies and multi-disciplinary work processes. Schlumberger has been supplying these services for several years under this scope and hence boasts widespread operational experience on the respective licenses and NCS exploration.

In recent times, Statoil has delivered strong exploration results, adding significantly to its resource base by making several high impact discoveries. The latest finds give the company access to new regions of Norway, Russia, Azerbaijan, Tanzania as well as Australia. These strengthen the company’s position and pave the way for profitable long-term growth.

Statoil carries a Zacks Rank #3 (Hold). However, better-ranked stocks in the oil and gas industry that are expected to perform well include Weatherford International plc (WFT - Analyst Report) and CNOOC Ltd. (CEO - Analyst Report). Both of these have a Zacks Rank #1 (Strong Buy).

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