Norwegian oil giant Statoil ASA ( STO - Analyst Report ) – along with its partners – has upgraded and confirmed that the pre-salt block BM-C-33 in the Campos basin offshore Brazil holds over 1.24 billion barrels of oil equivalent.

The Brazilian discoveries – Seat, Gávea and Pão de Açúcar – are estimated to hold reserves of 700 million barrels of light crude and 3 trillion cubic feet of gas or 540 million barrels of oil equivalent

The significant potential of the block BM-C-33 also increases Statoil’s outlook for its acreage in pre-salt Kwanza basin in Angola, which has similar geological characteristics.

These wells are considered more complex and dangerous to drill than conventional offshore wells, as they lie under a thick layer of salt at huge water depths. Under these conditions, it also becomes difficult to predict the location of the reservoir.

In particular, the high-impact Pao de Acucar discovery – located 195 kilometers off Rio de Janeiro– came across a hydrocarbon column of about 500 meters.

Repsol Sinopec, a joint venture between Spain’s Repsol YPFSA and China Petroleum & Chemical Corp. ( SNP - Analyst Report ) operates pre-salt block BM-C-33, with an interest of 35%. Statoil and Brazil's state-run energy giant Petrobras ( PBR - Analyst Report ) hold 35% and 30%, respectively. Output is distributed to each company as per their holdings in the block.

Statoil’s continuous effort to build a strong resource portfolio is aimed at increasing production through increased exposure to large energy resources with a long reserve life.

Statoil holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. Longer term, we maintain our Neutral recommendation on the stock.