Statoil ASA , on behalf of the Johan Sverdrup partnership, signed letters of intent (LOI) with Aibel and a joint venture of Aker Solutions and Kvaerner, relating to awards for Phase 2 of the Johan Sverdrup development. The awards are estimated at more than NOK11 billion.
A LOI relating to the construction of the processing platform topside for phase 2 of the project has been issued to Aibel. This comprises engineering, procurement and construction (EPC) of the topside for the second Johan Sverdrup processing platform (P2). On commissioning of this, which is scheduled for 2022, production capacity on the field will increase to 660,000 from 440,000 barrels of oil per day. The contract is valued at about NOK8 billion.
The LOI with a joint venture of Aker Solutions and Kvaerner is related to field centre modifications. The scope of the contract includes EPC of a utility module for the riser platform, field centre modifications and installation as well as hook-up activities associated with the phase 2 development. The contract value is projected at NOK3.4 billion.
By 2022, an area-wide solution for power from shore to the Utsira High area has been incorporated as part of phase 2 development. Installation of another power converter on the new processing platform will has been scheduled.
The plan for development and operation for Johan Sverdrup phase 2 is expected to be submitted in the second half of 2018. These contracts are subject to the Norwegian government’s approval for development and operation.
Benefits of Phase 2 Johan Sverdrup Development
The contracts for phase 2 are projected to boost activity at numerous yards along the Norwegian coast — in Haugesund, Egersund and Stord. Engineering activity will commence in Asker (Aibel) and Stavanger (Aker Solutions).
The Johan Sverdrup phase 2 development is expected to provide employment to more than 3000 people in Norway.
To ensure that the entire field of Johan Sverdrup is developed in a manner to gain from synergies, the partnership has started issuing LOI for the development of phase 2 of the project. The contracts will be awarded later in 2018. Production is likely to begin in 2022.
About Johan Sverdrup
To date, the Johan Sverdrup development has issued contracts worth more than NOK60 billion. Of this, more than 70% have been awarded to suppliers in Norway.
The field has held considerable value for owners and society for more than five decades. Phase 1 of the Johan Sverdrup development is in progress and is scheduled to commence in late 2019.
Statoil’s shares have gained 7.5% in the last three months, against the industry’s 7.1% decline.
Zacks Rank & Key Picks
Statoil carries a Zacks Rank #3 (Hold).
A few better-ranked players in the same sector are Continental Resources, Inc (CLR - Free Report) , Pioneer Natural Resources Company (PXD - Free Report) and Concho Resources Inc (CXO - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Continental Resources is an independent oil and natural gas exploration and production company. It delivered an average positive earnings surprise of 64.9% over the last four quarters.
Headquartered at Irving, TX, Pioneer Natural Resources Company is an independent oil and gas exploration and production entity. It pulled off an average beat of 66.92% in the trailing four quarters.
Concho Resources is an independent oil and natural gas company. It delivered a positive surprise of 48.9% during the same time frame.
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