Statoil (STO) Submits PDO For Snorre Field Expansion Project

Statoil (OL:STL) ASA (NYSE:STO) has submitted the plan for development and operation (PDO) of the Snorre expansion project to authorities on behalf of Snorre unit partners. The company also intends to award contracts worth NOK 9 billion.

Recovery from the Snorre field is expected to increase about 200 million barrels through the investment. The Snorre field plays an important part in Statoil’s attempt to enhance long-term value and operations at Norwegian continental shelf (NCS). Initially, the production life of Snorre A was anticipated to last until 2011-2014 but it was extended beyond 2040.

Apart from the PDO, Statoil is likely to ink contracts relating to the subsea production system with Technip (PA:FTI) FMC plc (NYSE:FTI) , manufacture and install the pipeline bundle system with Subsea and focusing on alteration work on Snorre A with Aibel. Transocean Ltd (NYSE:RIG) will also be awarded a rig contract. All contracts are subject to final approval of the PDO by Norwegian authorities.

Per the analysis of Agenda Kaupang, approximately 23,000 man-years will be performed in Norway in the Snorre Expansion Project phase.

The Snorre Expansion expected to be commissioned in 2021, will be operated and maintained by the existing Snorre organisation in Stavanger. Fjordbase in Floro will manage the supplies.

Partners in the Snorre field are Statoil, Petoro AS, ExxonMobil Corporation (NYSE:XOM) , Idemitsu Petroleum Norge AS, DEA Norge AS and Point Resources AS, holding 33.3%, 30%, 17.4%, 9.6%, 8.6% and 1.1%, respectively.

Snorre expansion is the largest improved oil recovery project (IOR) on the NCS and provides valuable production and activity, which are beneficial for the company, partners and society. Investment costs slightly exceed NOK 19 billion.

In 2017, Statoil submitted four plans for PDO including Njord and Bauge in the Norwegian Sea, Johan Castberg in the Barents Sea as well as Snorre Expansion Project in the North Sea. Total investment costs are around NOK 90 billion

Discovered in 1979, the Snorre field started production in 1992. The field is located in the Tampen area in the northern part of the North Sea in water depth of 300-380 meters. Expected production during PDO submission was 750 million barrels of oil. So far, the Snorre field has produced 1.4 billion barrels of oil

Price Performance

Shares of Statoil have gained 5.3% compared with the industry’s rally of 5.7% in the last three months.

Zacks Rank

Statoil currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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