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Norway’s Statoil ASA (STO - Analyst Report) has discovered oil and condensate in the North Sea’s Krafla West prospect. Situated around 26 kilometers south-west of the producing Oseberg South find, the discovery well encountered hydrocarbons in two columns with a total thickness of 300 meters.

Initial calculations show that Krafla West could be holding recoverable reserves between 12.6–37.7 million barrels of oil equivalent (mmboe).

The recent discovery, drilled by semi-submersible Ocean Vanguard, comes in the wake of another discovery at the Krafla prospect last month. Both discoveries are estimated to have combined proven reserves of about 50–75 mmboe and may turn out to be highly profitable. This is considered to be a significant figure in a near-field context.

In the latest discovery, Statoil is the operator of the licence with a 50% stake. Its partners –– Det Norske Oljeselskap ASA and Svenska Petroleum Exploration AS –– hold 25% each. The two wells are the first to be drilled by Statoil in the licence.

Krafla and Krafla West are located in the same region as Stjerne, previously Katla, which was proven in 2009 and is already under a development and operation plan of Statoil.

The latest breakthrough proves that growth potential is still present in the mature part of the North Sea. It also establishes the fact that further extraction of oil from existing fields to extend their production life is also possible.

The discoveries provide a base for vigorous fast-track development by tying them to the existing infrastructure in the Oseberg area.

Ocean Vanguard, the Diamond Offshore (DO - Analyst Report) drilling rig, will now progress to production license 569 at the southern end of Norway’s North Sea sector to drill for Statoil on the Theta North-East prospect.

Statoil has a Zacks #3 Rank, which translates into Hold rating for the short term. We are Neutral on the company for the longer term.

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