Equinor ASA ( EQNR Quick Quote EQNR - Free Report) decided to defer its innovative Bay du Nord oil project offshore Canada for up to three years.
Discovered in 2013, Bay du Nord is situated in the Flemish Pass region off the coast of Newfoundland and Labrador. Once completed, it will be the first deepwater drilling site in Canada. The project operated by Equinor is expected to be valued at more than $12 billion.
The project was initially delayed due to rising expenses and the coronavirus pandemic. However, the project was resumed after some nearby discoveries increased resources and potentially secured the environmental all-clear from Ottawa.
Equinor and partners will postpone the Bay du Nord project to enhance project robustness despite the volatile market conditions. In recent months, the Bay du Nord project experienced significant expenditure growth mostly due to volatile market conditions.
Bay du Nord involves five discoveries with significant additional near-field prospectivity. Equinor continues to evaluate exploration drilling around the Bay du Nord field in 2024. The company can drill two more prospects — Sitka and Bakeapple.
Bay du Nord will be a key driver to help meet the global oil demand, while supporting the country's pledge to carbon neutrality by 2050. The project is also crucial to the Newfoundland and Labrador economy, as it will provide significant employment and economic opportunities.
Canada is one of Equinor’s core areas. Through Bay du Nord, the company maintains a strong business in the country. EQNR will utilize the postponement to continue to mature Bay du Nord toward successful development.
Shares of EQNR have underperformed the
industry in the past six months. The stock has lost 31.3% compared with the industry’s 9.4% decline.
Image Source: Zacks Investment Research Zacks Rank & Stocks to Consider
Equinor currently carries a Zack Rank #3 (Hold).
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