Tuesday, June 21, 2011

Statoil Eyes $32 Billion Investment over the next two years; Plans to increase production to above 2.5 mmboepd over the next 10 years

Norwegian oil giant Statoil ASA will spend $32 billion on exploration and production over the next two years as it aims to ramp up production to above 2.5 mmboepd over the next decade. Statoil, which produces about 80 percent of Norway’s oil and gas, is expanding abroad to maintain output and boost reserves amid dwindling production from aging North Sea fields. The company plans to double oil output in Brazil in less than a decade, and is seeking to add to its portfolio.

In addition to continued focus on production from operations on the Norwegian Continental Shelf (NCF), Statoil said the increased output will come through strengthened positions in the Gulf of Mexico, Brazil, Angola, the Caspian region and Arctic Sea, while also stepping up production of shale gas and liquids. "The NCF remains a very attractive and globally competitive province for future oil and gas activities," said, Statoil Chief Executive, Helge Lund.

As well as conventional oil and gas operations, Statoil is developing the Eagle Ford shale field in southwestern Texas through a joint venture with Talisman Energy Inc. and the Marcellus shale region together with Chesapeake, which includes northern West Virginia across Pennsylvania and parts of New York.

View the Eagle Ford Shale deal snapshot here:

Source: The Derrick E&P Transactions Database
Growing Market:
Statoil will “benefit from our strong gas position in a growing gas market,” said Lund. Oil and gas from sites along the Norwegian coast will account for about 1.4 million barrels of oil equivalent a day in 2020, the company estimated. The international portfolio, which will also include non-Norwegian Arctic sites and the Caspian region, is forecast to produce about 1.1 million barrels of oil a day, Statoil said.

The company will spend $16 billion on exploration, drilling and production in 2012, on par with what it will spent in 2011. Statoil expects to drill 20 to 25 high-impact wells in the years 2011 to 2013.

The company in February 2011 forecast output will grow on average 3 percent in each of the next two years, to about 2 million barrels of oil equivalent a day, below a former target of 2.06 million to 2.16 million barrels. "The positive is that they are announcing growth internationally to 1.1 million barrels in 2020, and they are quite specific about that, given that they haven't quite delivered recently," said Trond Omdal, an analyst at Arctic Securities.

Exploration would be about $3 billion this year, up from about $2.5 billion in 2010 when the company trimmed spending in the wake of the global financial crisis, Tim Dodson, head of the company's exploration arm, told Reuters.

Reserves have been in decline, with a replacement ratio of just 87 percent in 2010 and 73 percent in 2009. Oil and gas production in Norway, which accounts for about half of the company's total output, is expected to be above 1.4 million boed in 2020, the level it produced in 2010.

Statoil's Exploration Portfolio for 2011 and 2012:

Source Documents:

Hupecol to divest La Cuerva interest

Scotia Waterous (USA) Inc has been retained as exclusive financial advisor by Hupecol to explore alternatives to optimize the company’s portfolio, including the divestment of Hupecol’s interest in the La Cuerva block in Colombia’s Llanos Basin.  

Highlights of the Offering:
1) La Cuerva block in the Eastern portion of the Llanos Basin consisting of ~47,950 gross acres
  • 100% WI, and operated by Hupecol
  • Contract consists of an 8% royalty
  • Contract does not contain over-rides or preferential rights; all obligations have been met
2) Opportunity to acquire current production with significant exploration and development upside
  • Production of approximately 2,900 bbl/day (June 2011)
  • Targeted reservoirs, typically in the Carbonera C3/C5/C7 reservoirs found between 3,500 and 4,500 ft TVD, have excellent production characteristics
3) Net 2P reserves of more than 16.3 MMboe certified by third-party reserve engineers Petrotech with a PV-10% of  approximately US$435 million based on a 3/31/2011 effective date 
  • Proved: 6.1 MMbbl oil (47% proved developed); probable and possible: 13.8 MMbbl; 3.7 MMbbl of prospective resources identified
  • Widespread 3-D seismic coverage over reservoirs of excellent quality

PROPOSALS DUE: August 11, 2011

Recent deals in Colombia and valuation of La Cuerva block

The value of the La Cuerva block is estimated to be $200-$430 million, based on
  • $18-$22/2P BOE, a close comparable to the Hupecol-Sinopec deal where the 2P metric was $25/BOE. The Hupecol-Sinopec metric is discounted to account for the difference in RLI of  La Cuerva block (15 years) and Hupecol-Sinopec assets (6 years). With $18-$22/2P BOE, the value of the asset is $290-$360 million.
  • $70,000/Daily BOE for the current production of 2,900 bbl/day and thereby the value of the asset to be $200 million.
  • 2P-NPV10 of $435 million, as reported in Scotia's marketing flyer.

To see what other operators are reporting about "Llanos Basin", use our oil and gas document library:

Other opportunities available in Colombia
There are currently three other asset packages in Colombia that are available for sale. The packages are offered by InterOil and Alange Energy. The snapshots of the packages are as follows- 

Source Documents:

View more documents from derrick_anitha


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