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Statoil Makes One Discovery, Two Wells Turn Out Dry Off Britain


Statoil ASA STO has hit one discovery and two wells during its North UK sea-drilling campaign in the Verbier well. These finds include one dry well and one non-commercial well, as per the Norwegian oil giant.

The viable discovery was made in the Verbier sidetrack well in the outer Moray Firth on the UK Continental Shelf. The well is expected to hold at least 25 million recoverable barrels of oil. Per the initial estimations, the discovery may hold recoverable resources in the range of 25 and 130 million barrels of oil.

However, more drilling is required to know the extent of discovery. Moreover, the partners will continue their appraisal to establish the viability of the discovery and seeking further prospects within the P2170 license.

After hitting water-filled sand, the company decided to drill a sidetrack of the Verbier main wellbore to evaluate its potential.

Statoil holds 70% in the license, while the other partners include Jersey Oil and Gas and CIECO Exploration and Production holding 18% and 12%, respectively.

The outcome of Mariner Segment 9 and Jock Scott was disappointing. The Mariner Segment 9 hit two oil-filled sands in the Heimdal Formation and a thin oil column in the deeper Maureen Formation. The data acquired from this well will be used to verify the amount of the Heimdal sand bodies. Jock Scott turned out dry and met with no reservoir section.

Statoil has made discoveries with volumes worth 4.4 billion barrels of oil equivalent over the last four years. Also, we expect growth from new upstream projects in various prospective fields of Norway. The ramp-up of these projects will likely help Statoil witness 5% organic production growth in 2017.

About Statoil

Statoil’s endeavor to improve recovery of resources in mature fields is commendable. The company has operations in all major hydrocarbon-producing regions of the world, with an emphasis on the NCS. Shares of the company have returned 19.6% compared with the industry’s increase of 9% over the last three months. However, the company’s high leverage is a cause for concern.

Zacks Rank & Key Picks

Currently, Statoil carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector include First Solar Inc FSLR, Eclipse Resources Corporation ECR and Alliance Resources Partners, LP ARLP. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

First Solar designs, based in Tempe, AZ, manufactures and sells solar electric power modules using a proprietary thin-film semiconductor technology. The company delivered an average positive earnings surprise of 524.24% over the last four quarters.

Eclipse Resources is an independent exploration and production company. The company delivered average positive earnings surprise of 50.0% over the last four quarters.

Alliance Resources Partners is a diversified producer and marketer of coal to major U.S. utilities and industrial users. The firm delivered an average positive earnings surprise of 29.76% over the last four quarters.

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