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Statoil Awards Santos Basin Drilling Contract to Seadrill

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Statoil ASA’s subsidiary Statoil Brasil Oleo e Gas Ltda has awarded rig contracts to Seadrill Ltd (SDRL - Free Report) for exploration drilling in the BM-S-8 license located in the Santos basin.

The agreement comprises two contracts, wherein Seadrill Offshore AS will supply the drillship West Saturn, and Seadrill Serviços de Petroleo Limitada will offer services on board. As part of the license commitments of the exploration phase, the fixed contract scope consists of one exploration well and one drill stem test. The BM-S-8 license encloses parts of the Carcará pre-salt oil discovery.

Built in 2014, the West Saturn is a 6th generation ultra-deepwater drillship and designed to drill in water depths of up to 12,000 feet (3600 meters). The contracts are expected to begin between Dec 1, 2017 and Mar 1, 2018. Under the agreement, Statoil plans to drill the independent Guanxuma prospect.

Subsequent to the Guanxuma well, the company intends to carry out a drill stem test on the Carcará discovery.

Besides the firm program, the contract comprises options for seven more exploration wells.  Based on the results of the firm exploration program, Statoil can exercise these options and may deploy the West Saturn across its Brazilian assets, which is subject to regulatory approval.

Recently, the company announced an agreement that will boost the its interest in the BM-S-8 license to 76% from 66%. Evaluating the Carcara discovery will supply vital information for the field’s development. In addition, Statoil is assessing its options for the Northern open area licensing round, anticipated to begin in Oct 2017. We believe that the companyl is well-positioned for future operatorship of a unitized Carcará field.

Statoil’s presence in Brazil dates back to over 15 years. The company has built a strong portfolio, including the Peregrino field in Campos basin and assets in the exploration and development phase. During this period, the company invested more than $10 billion, paid almost $1 billion of government take and employed over 1.000 people.

Shares of the company have gained 2.4% over the last six months compared with the Zacks categorized Oil & Gas – International Integrated industry’s decline of 1.1%.

Statoil currently has a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the same space include Cheniere Energy Inc (LNG - Free Report) and Canadian Natural Resources Limited Ltd. (CNQ - Free Report) . Both these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cheniere Energy delivered a positive earnings surprise of 162.16% in the preceding quarter. The company beat estimates in one of the trailing three quarters, with an average positive earnings surprise of 14.0%.

Canadian Natural Resources delivered a positive earnings surprise of 30.77% in the preceding quarter. It surpassed estimates in two of the trailing four quarters with an average negative earnings surprise of 275.46%.

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