Norwegian oil and gas company Statoil ASA (STO - Free Report) has successfully completed the appraisal of a well in production license 265 (PL265) in the Johan Sverdrup oilfield in the North Sea.
The main objective behind the appraisal of probe 16/2-14 was to determine the thickness and quality of Jurassic age sandstone reservoir near the top of the Johan Sverdrup’s structure. Proven in 2010, the Johan Sverdrup discovery is expected to hold recoverable reserves of about 1.8 billion barrels of oil equivalent, as per the Norwegian Petroleum Directorate estimates.
This represents the ninth exploration well in PL265, which came across a 30-meter oil column in Upper Jurassic reservoir rocks and the reservoir quality was also proven to be extremely good and oil saturated. The well was drilled to a vertical depth of 1,960 meters below the sea surface to reach a water depth of 113 meters
The foremost challenge for the reservoir was its mapping owing to the considerable variations in the reservoir properties and thickness.
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 Barents 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 - Free 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.