Statoil (NYSE:STO) is depending on the successful development of an extensive inventory of oil and gas projects in the United States to achieve the production goals outlined at a recent analyst meeting.
TUTORIAL: Commodity Investing 101
Statoil has a goal of increasing production by a compound annual growth rate of 3% through 2020, achieving production of 2.5 million barrels of oil equivalent (BOE) per day. North America is a large part of that plan and the company hopes to ramp up production here to 500,000 BOE per day by 2020. Much of this growth will come from existing projects and future exploration in both the onshore and offshore areas of the United States.
Offshore United States
While some operators have left the Gulf of Mexico, Statoil has a large number of exploratory and development projects planned here through 2020.
Statoil has a number of major projects in the Gulf of Mexico set to begin production over the next three years. The company has a 23.55% working interest in the Caesar/Tonga project, which is operated by Anadarko Petroleum (NYSE:APC). First production is expected from Caesar/Tonga in 2012.
Statoil is also involved with Chevron (NYSE:CVX) on several projects in the Gulf of Mexico. The company has a 25% interest in the Jack field, a 21.5% interest in the St. Malo field and a 27.5% interest in the Big Foot project. Statoil expects production from these projects to start up in 2013.
Statoil has 40 exploration prospects in the Gulf of Mexico, and plans to be involved with between 15 and 25 exploratory wells from 2011 to 2013. One area that Statoil is working on is the Logan prospect, where the company recently received a permit to begin drilling.
Onshore United States
Statoil entered into the Marcellus Shale in 2008 when the company signed a joint venture with Chesapeake Energy (NYSE:CHK). The company paid $3.375 billion for a 32.5% stake in 1.8 million acres of leasehold. This consideration included cash of $1.25 billion and an obligation to pay up to $2.125 billion of future drilling costs.
Chesapeake Energy is operating 33 rigs in the Marcellus Shale as of April 2011, and Statoil expects that this aggressive level of development will lead to production of 50,000 BOE per day by 2012 and 200,000 BOE per day in 2020.
In October 2010, Statoil announced the acquisition of acreage prospective for the Eagle Ford Shale as part of a joint venture with Talisman Energy (NYSE:TLM). The company now has a 50% share of a 156,000 acre leasehold, with much of the acreage in the liquids rich portion of the play.
The joint venture agreement also calls for Statoil to become operator of 50% of the acreage within three years, and this transition will begin in 2012. Talisman Energy plans aggressive development of this acreage in 2011 and will ramp up from four to 10 operated rigs by the end of the year.
The Bottom Line
Statoil will be very active in the onshore and offshore area of the United States as the company gears up to achieve production goals of 2.5 million BOE per day by 2020. (For more, see How Does Crude Affect Gas Prices?)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!