Statoil Appraises 16/2-14 in PL265

Norwegian giant Statoil ASA ( STO - Analyst Report ) has announced the start of spudding of the appraisal well 16/2-14 in PL 265 in the Norwegian North Sea.

The assessment of well 16/2-14 targets the Espevaerhogda structure, which forms the crestal part of the huge Johan Sverdrup discovery off Norway.

Drilled by semi-submersible Ocean Vanguard, appraisal of probe 16/2-14 is intended for determining the thickness and quality of Jurassic age sandstone reservoir on a structural high flanked by the Johan Sverdrup’s earlier appraisal wells 16/2-8 and 16/2-10 in PL265.

The development of Johan Sverdrup discovery will begin following the execution of an extensive data acquisition program. The well is estimated to reach a total depth of 6,430 feet (1,960 meters) below mean sea level and drilling of the well will likely be completed in about 75 days.

Statoil, as the operator of license PL 265, holds a 40% stake, while its partners – Petoro AS, Det norske oljeselskap ASA and Lundin Norway AS – own 30%, 20% and 10% stakes, respectively.

This new appraisal emphasizes Statoil’s belief in the exploration potential of the mature region of Norwegian Continental Shelf (NCS).

We have a favorable outlook on Statoil’s long-term production growth, given the company’s growing upstream presence in the emerging basins of the Barrents Sea, West Africa and the deepwater U.S. Gulf of Mexico (GoM). We also believe that the growing share of natural gas in Statoil’s NCS volume mix and its extensive interests in infrastructure assets facilitates a leadership position in the European natural gas market.

Statoil, which recently contracted Schlumberger Limited ( SLB - Analyst Report ) for electric wireline logging services on the NCS, carries a Zacks #3 Rank, which translates to a Hold rating for a period of one to three months. Longer term, we maintain a Neutral recommendation on the stock.