Statoil (NYSE:STO) plans major capital investments in the exploration and development of oil and gas assets as the company seeks to meet its production goals for 2020. The company held an analyst meeting in June 2011, and established a goal of 3% compound annual growth in production through 2020. The exploration and development of oil and gas assets on the Norwegian Continental Shelf is an integral part of the company's strategy to meet this goal.
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Norwegian Continental Shelf
Statoil considers the Norwegian Continental Shelf to be the company's core oil and gas area, and reported production of 1.4 million barrels of oil equivalent (BOE) per day from this area in 2010. This represented approximately 59% of the company's total production for the year.
Statoil reported production from 44 operated fields and seven non-operated fields on the Norwegian Continental Shelf in the fourth quarter of 2010. The company's largest field is the Troll gas area, which produced 191,000 BOE per day in the fourth quarter of 2010. Although most of this production is composed of natural gas, the company also has production from the Troll oilfield which added another 39,000 BOE per day of production. (Learn more about investing in this area, read Oil And Gas Industry Primer.)
Statoil has a 30.58% interest in both the Troll gas and oil fields, which are also partly owned by Total (NYSE:TOT) and Conoco Phillips (NYSE:COP). Another large field for Statoil is the Asgard field, located approximately 125 miles offshore in the Norwegian Sea. This field produced 135,700 BOE per day in the fourth quarter of 2010 and Statoil has a 34.57% interest.
Statoil estimates that the company will add 700,000 BOE of new production from the Norwegian Continental Shelf through 2020. This is enough to offset ongoing production declines at producing fields, and keeping 2020 production from this area above 1.4 million BOE per day. This production estimate also includes a contribution from future exploration as well.
One project scheduled to start up in late 2011 is the BP (NYSE:BP) operated Skarv project located in the North Sea. Statoil has a 36% interest in Skarv and expects this project to produce up to 80,000 BOE per day in the initial phase. Another non-operated project is the Marulk field being developed by Eni (NYSE:E). Statoil has a 50% interest in this field, which is scheduled to begin production in mid 2012.
One development that is operated by Statoil is the Gudrun project in the North Sea. The company estimates that the field holds recoverable reserves of 132 million BOE, and will have capacity of 70,000 BOE per day. Statoil recently purchased the 20% stake in Gudrun that was owned by Marathon Oil (NYSE:MRO) and now owns 75% of this project. The company expects production to start up in 2014. (How a company accounts for its expenses affects how its net income and cash flow numbers are reported, learn more in Accounting For Differences In Oil And Gas Accounting.)
Statoil is relying on the development of various operated and non-operated projects located on the Norwegian Continental Shelf to achieve the company's goal of 3% compound annual production growth over the next decade.
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