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.

TUTORIAL: 20 Investments

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.

New Projects
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.)

Bottom Line
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.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this article, risk free!

Related Articles
  1. Mutual Funds & ETFs

    Top 3 Switzerland ETFs

    Explore detailed analysis and information of the top three Swiss exchange-traded funds that offer exposure to the Swiss equities market.
  2. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  3. Savings

    Do Natural Gas Prices Always Follow Oil Trends?

    Prices for oil and natural gas are highly correlated. But investors should be aware of different factors affecting the prices of these commodities.
  4. Charts & Patterns

    Understand How Square Works before the IPO

    Square is reported to have filed for an IPO. For interested investors wondering how the company makes money, Investopedia takes a look at its business.
  5. Technical Indicators

    4 Ways to Find a Penny Stock Worth Millions

    Thinking of trading in risky penny stocks? Use this checklist to find bargains, not scams.
  6. Professionals

    Chinese Slowdown Affects Iron Ore Market

    The Chinese economy's ongoing slowdown is having a major impact on iron ore demand.
  7. Investing Basics

    Why do Debt to Equity Ratios Vary From Industry to Industry?

    Obtain a better understanding of the debt/equity ratio, and learn why this fundamental financial metric varies significantly between industries.
  8. Mutual Funds & ETFs

    ETF Analysis: SPDR Dow Jones International RelEst

    Learn how the SPDR Dow Jones International Real Estate exchange-traded fund (ETF) is managed and for whom the ETF is most appropriate.
  9. Investing Basics

    Explaining Trade Liberalization

    Trade liberalization is the process of removing or reducing obstacles that impede the exchange of goods and services between nations.
  10. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Profit Margin

    A category of ratios measuring profitability calculated as net ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis ...
  4. Brazil, Russia, India And China ...

    An acronym for the economies of Brazil, Russia, India and China ...
  5. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  6. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
RELATED FAQS
  1. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>
  6. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!