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Equinor to Invest in Troll Field & Buy Carcara Area Stake

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Equinor ASA (EQNR - Free Report) recently announced its plans of investing around 7.8 billion kroner ($936 million) for developing the huge offshore Troll field on the Norwegian continental shelf. The move is expected to enable the company to supply energy to the European market through 2050. Moreover, the company agreed to acquire 10% interest in Brazil’s Santos basin’s BM-S-8 license. 

Significance of the Troll Project

The latest investment plan marks the third development phase for the oil and gas field located off the coast of Norway. It is estimated to produce 2.2 billion barrels of oil equivalent at a break-even cost, which is less than $10 a barrel. Per Equinor, Troll production has a carbon intensity of only 100 grams per barrel.

Moreover, the company expects the export volume from the field to account for 8% of the European Union’s annual gas consumption. Per the company, the Troll field that came online in 1995 has so far created 175 million kroner ($21.4 million) of average revenues per day. Around 65% of the trapped gas in the field is yet to be recovered.  The field is anticipated to create a huge value of 1.65 trillion kroner (around $202 billion) in the future.

Equinor is the operator of the field with 30.58% stake, and has Petoro, Royal Dutch Shell plc (RDS.A - Free Report) , TOTAL S.A. (TOT - Free Report) and ConocoPhillips (COP - Free Report) as partners with 56%, 8.1%, 3.69% and 1.62% interest, respectively.

Acquisition

Equinor will acquire Barra Energia’s entire 10% stake in BM-S-8 license for $379 million. The deal will increase Equinor’s stake to 46.5%. Once the deal is complete, the company intends to sell down 3.5% of its stake to ExxonMobil and 3% to Galp, its license partners. The price adjustment for the deal with Barra takes into consideration a date in July 2016. The deal is expected to help the companies fully align their stakes through two licenses for the Carcará area, which includes BM-S-8 and Carcará North Blocks.

Price Performance and Zacks Rank

Headquartered in Stavanger, Norway, Equinor has gained 57.6% in the past year compared with 32.9% increase of its industry. Currently, the company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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