Statoil ASA ( STO - Analyst Report ) and Russian state-owned oil company OAO Rosneft have signed shareholder and operating agreements for four offshore Russian licenses that were included in their co-operation agreement signed back in May. The latest deal entails the parties to form joint ventures to explore the related licenses.

Exploration work will now be conducted at the Perseevsky license in the Russian part of the central Barents Sea and three licenses — the Kashevarovsky, Lisyansky and Magadan-1 — north of Sakhalin island in the Sea of Okhotsk. The duo agreed to set up a work program that includes drilling of six wildcat wells in the areas between 2016 and 2021. Statoil intends to fully finance the exploration phase of the four licenses, which cover more than 100,000 square kilometers.

Statoil will hold 33.3% in each of the joint ventures while Rosneft will have an equity share of 66.7%. The two state-owned companies have also agreed to jointly bid for certain licenses in Norway's upcoming licensing round. However, they remain unclear about Statoil's properties that may be available to Rosneft as part of the pact.

Located in the western part of the Barents Sea, the Perseevsky license block has prospective recoverable resources of more than 2 billion tons of oil equivalent. Whereas Magadan 1, Lisyansky and Kashevarovsky license blocks have prospective recoverable resources of over 1.4 billion tons.

In the wake of a surge in global oil demand, we see the Norwegian oil major as benefiting from this cooperation alliance with the world’s largest hydrocarbon-producing nation. The pact will aid Rosneft in extracting heavy oil in Siberia and shale oil in Stavropol, in southern Russia through Statoil’s expertise and experience from developing unconventional hydrocarbon resources in the U.S., Norway and Brazil.

Recently, Statoil’s partnership with Rosneft in a multibillion-dollar development program in the Gazprom-led Shtokman gasfield in the Barents Sea was put on hold by Gazprom due to escalating costs. The Norwegian giant, which held 24% interest in the project − stated that it has already written off approximately NOK 2 billion ($340 million) of investment and returned its shares in that consortium.

In this connection, it is important to note that Rosneft had also struck agreements with Italy's Eni SpA ( E - Analyst Report ) and U.S. energy behemoth ExxonMobil Corporation ( XOM - Analyst Report ) for the exploration of oil in Russia's Arctic region.

We remain upbeat on Statoil’s upstream initiatives and its significant discoveries in the mature North Sea as well as in the Barents Sea that reaffirm the potential of the Norwegian Continental Shelf.

Statoil retains a Zacks #2 Rank (short-term Buy rating).