Lundin announce a discovery at Luno II

Lundin Petroleum AB (STO: LUPE) announced that an exploration well 16/4-6S on the Luno II prospect is a discovery with significant potential. A gross oil column of more than 40 metres of good quality light oil has been proven with oil water contact at just under 2000 metres below sea level.

The pressure reading indicates that the Luno II petroleum system is different of those in nearby Edvard Grieg and Johan Sverdrup fields. The well now goes into production testing and a resource estimate is expected in 2-3 weeks. Lundin is the operator of the license with a 40% stake in the project. It is partnered with Statoil (OSE: STL, NYSE:STO) and Premier Oil plc (LSE: PMO), both of which have a 30% chunk.

Statoil Q2 net operating income over 1 billion per day

Statoil's (OSE:STL, NYSE:STO) net operating income was up by 2% to 62 billion NOK. Oil and gas production of the company was 17% higher at almost 2 mboe per day while average per barrel liquids price fell by 11% to just under 100 USD. Of the total production liquids represented 58% and gas 42%. Net income of 26.6 billion and earnings per share of 8.30 are 2% lower than in Q2 2011. Total revenues topped 200 billion.

The company maintains expectation and is guiding an organic CAPEX of 18 billion USD with 45 wells to be completed in 2012 meaning an exploration activity of same 3.5 billion USD. Equity production should grow by around 3%. Production in 2013 is expected to be level with 2012. The firm targets 2.5 million barrels per day of oil equivalent in 2020.

Norway oil & gas shutdown stopped by government intervention

Labour Minister Hanne Bjurstrøm put an end to the industrial action that was threatening to halt production on the Norwegian Continental Shelf just moments before the deadline. She defended her harsh call for compulsory arbitration by saying that Norway’s reputation as a reliable supplier was at risk. This would have endangered relations with customers and had major domestic consequences in lost revenue and effect on the industry. Statoil (OSE: STL, NYSE:STO) assumes full production will be reached in a week.

Oil Industry gives lockout warning

The Norwegian Oil Industry Association (OLF) gave an advance notice of a complete lockout of the 6515 workers covered by the offshore pay agreements from 00.00 on Tuesday 10th of July. This follows a strike from the unions. The biggest fight is still over the pension scheme. OLF has already offered high pay rises of more than five per cent. The two sides with Industry Energy (Industri Energi), the Organisation of Energy Personnel (SAFE) and the Norwegian Organisation of Managers and Executives (Lederne) representing the employees are reportedly still far apart.

Statoil (OSE:STL, NYSE:STO) is already preparing to shut down all of its production on the Norwegian continental shelf (NCS). This would result in a production shortfall of 1.2 million boe per day, worth approximately 520 million NOK. It takes 1-4 days to shut down fields, depending on the complexity of the said field. The unprecedented steps put Norway’s reputation as a reliable supplier at risk. The total average daily production of the industry from NCS is 2 million boe of oil, NGL and condensate and 1.8 million boe of gas.

Statoil:High impact gas and condensate discovery in Norwegian North Sea

Statoil ASA (OSE: STL, NYSE:STO 77.8%) said that it and partner Total S.A. (Euronext: FP, NYSE: TOT, 22.2%) have made a high impact discovery with a proven 48-metre gas/condensate column in the main bore and 70 metre column in side-track has been made in King Lear prospect in the southern part of the Norwegian North Sea. Statoil estimates total volumes in between 70 and 200 million barrels of recoverable oil equivalent. The new discovery lies some 20 kilometres north of the major Ekofisk field.

Statoil had high expectations and says that this shows how Norwegian continental shelf can still deliver high value barrels. The drilling was done by the jack-up Maersk (OMX: MAERSK B) Gallant in licenses 146 and 333. The work is done in high-pressure, high-temperature conditions, requiring heavy safety precautions. The company plans appraisal drilling and exploration on other ”interesting prospects” in the licenses.

Offshore oilfield workers striking in Norway

Up to 700 oil workers have started a strike in the Norwegian North Sea demanding earlier retirement benefit. Oseberg and Heidrun are the fields most affected. Oseberg field is operated by Statoil ASA (OSE: STL, NYSE: STO, 49.30%) with Norwegian state owned Petoro 33.60 % Total S.A. (Euronext: FP NYSE: TOT 10 %) Exxon Mobil (NYSE: XOM, 4.7 %) and ConocoPhillips (NYSE: COP; 2.4 %) as its partners. Heidrun is also operated by Statoil (12.40%) but Petoro (58.16%) and ConocoPhillips (24.31%) have bigger stakes while Eni (S.p.A. (BIT: ENI, NYSE: E, 5.11%) rounds up the partners lot. The fields will come offline in 4-5 days, which would result in disruption of some 268 000 boe per day or about 7% of Norway’s production. Oseberg is currently producing about three times more than Heidrun. Statoil’s Tjeldbergodden industrial complex in Møre og Romsdal county, which has a natural gas processing plant for Heidrun output and a methanol plant is already being shut down.

Oil workers in Norway already enjoy the highest pay in the world with an average around 1 million NOK (over 130 000 Euros), which is about double that of the world average in the industry, and retire on average at the age of 65 with a 66% pension from the age of 67. The workers representatives the Industry Energy and Safe unions demand higher pay and the right to retire at 62. The unions say that the employers are trying to steal workers right to pension. Employers’ representative Norwegian Oil Industry Association says the demands correspond to a 20% wage hike if the pension demand would accrue fully from age 62 and does not even plan to take the retirement issue into the negotiation table, calling it absolutely absurd. The strike will cost the industry some 150 million NOK or 20 million Euros per day. If either side sought to escalate the industrial action, an order to return to work by the Government could ensue.

Statoil foresees oil demand growth until 2030

Statoil’s (OSE: STL, NYSE:STO) Energy Perspectives 2012 annual outlook foresees over 40% increase in global energy demand by 2040 as its main scenario. This is based on a 2.8% annual growth rate with emerging economies leading the way. Oil demand is likely to be dampened by environmental policies, relatively high prices and change towards more efficient and energy conserving ways of transportation. Statoil expects it to peak in 2030 with private transportation demand from emerging economies contributing in the growth.

Statoil sees natural gas as a cost effective way to clean the energy mix with further LNG integration. Annual global gas demand is expected to grow 60% in absolute terms by 2040 and to increase its share in the global energy mix modestly. In relative terms, renewables should be the biggest winner, raising their share of the mix to a fifth from current 13.5%.

There may be some supply side upside surprises in the oil production, for example from North American tight oil. Current global oil reserves of 1523 billion barrels with nearly three quarters of that in OPEC hands, suggesting it will continue to play a major role, even though the changes in United States from both tight oil and shale gas development will present a challenge for the organization. Marginal production costs of new projects outside OPEC have risen considerably and Statoil sees full cycle marginal costs at 75-90 USD per barrel. The report notes that there is considerable uncertainty involved within the economic development and lists two alternative scenarios. The full text is available here and presentation slides here.

Svalin field development plan submitted

Statoil ASA (OSE: STL, NYSE: STO, 57%), as the operator and its partners Petoro AS (30%) and ExxonMobil E&P Norway (subsidiary of Exxon Mobil Corporation (NYSE: XOM), 13%) submitted Svalin field development plan to the Ministry of Petroleum and Energy in Norway on Friday. The development solution is a tie-back to Grane platform, which lies about six kilometres south-west at a depth of ~125 metres. The estimated investment is 4.5 billion NOK. Svalin M discovery will be producing through a well drilled from Grane platform while Svalin C will have a six-kilometre long subsea flowline connection. The estimated startup is in late 2013 – 2014 with the aim of daily aggregate production of 100 000 boe by 2014.

Svalin field, which was discovered originally in 1992 (Svalin C) with further discoveries in 2008 (Svalin M), (license PL 169) is located in Block 25/11 in the North Sea between Grane and Balder fields. It is estimated to contain 75 million boe (12 million standard cubic metres) in similar quantities in the two structures. Aker Subsea AS, the subsea group of Aker Solutions (OSE: AKSO) has been given the contract for subsea production system and pipeline where as marine operations are to be performed by Subsea 7 (OSE: SUBC).

Grane platform is a traditional fixed jacket with 40 well slots and has thus far been serving Grane oil field which has been producing since 2003 and has an estimated field life of 25 years with reserves up to 700 million boe. There will be some modifications to enable Grane platform to handle gas from Svalin. The Svalin development will mitigate the decline of oil and gas processed on the platform.

Statoil awards 7 contracts for newbuilds

Statoil ASA (OSE: STL, NYSE: STO) has awarded charter contracts on the Norwegian Continental Shelf for seven new supply vessels. Farstad Shipping ASA (OSE: FAR) and Atlantic Offshore AS will supply two each which leaves one for Simon Møkster Shipping AS, Troms Offshore Management AS and Remøy Shipping AS respectively. The total worth of the contracts is 3.5 billion NOK. The vessels are required to meet stringent environmental standards. Several of them are designed for operation in the High North with the highest oil-spill protection classification.

Simon Møkster Shipping and Troms Offshore vessels were named as those used in High North supply needs. Farstad Shipping and Atlantic Offshore received a six year contract with three annual options and the remaining suppliers were given three year contract with three annual options. Remøy Shipping is LNG-powered and becomes the sixth such Vessel chartered by Statoil. The newbuilds will be delivered by the end of 2014.

Another high impact gas discovery in Tanzania

Statoil (OSE: STL, NYSE:STO) as the operator and its partner ExxonMobil announced a large gas discovery in Block 2 license in Tanzania. The Lavani well confirms a new high impact discovery with preliminary resource estimate of 2 trillion cubic feet of gas in place from the 95 metres of excellent quality reservoir sandstone met by the well. The discovery lies a mere 16 kilometres south of the Zafarani discovery announced earlier. The Zafarani resources were simultaneously upgraded by 1 Tcf to 6 trillion cubic feet of gas in total.

Statoil and Sinochem acquire Peregrino FPSO vessel from Maersk

Statoil (OSE: STL, NYSE: STO) and China's Sinochem have agreed to purchase Peregrino FPSO vessel from A.P Moller Maersk (OMX: MAERSK A, MAERSK B) for an undisclosed price. Peregrino vessel has a storage capacity of 1.6 million barrels of oil and it has been operating offshore Brazil in the Peregrino (formerly Chinook) field in the Campos Basin since last year following a 4-year project to convert the then very large crude carrier (VLCC) vessel to a complex offshore oil production installation. That investment cost in excess of 1 billion USD.

The two partners (Statoil has 60% stake in the field estimated to contain 2.3 billion boe) had an option to buy the vessel a few years in and with Maersk focusing on core operations, the time was right for such a move. The operation of the vessel will be taken over by FPSO contract BW Offshore (OSE: BWO) following a transition period. There are around 200 employees on the vessel and it has had a good safety record. Maersk says that the gain from the sale will not have a material impact on group results. The company still maintains two FPSOs and other units in its FPSO business.

Nigerian court dismisses Statoil’s appeal

Newspaper Dagens Næringsliv writes that Dr. John Abebe, former oil consultant of Statoil (OSE: STL, NYSE:STO) in Nigeria, who was previously known as ”Mr Statoil” has won a lawsuit against the company in the Court of Appeals of Lagos. The court awards him a claim to 1.5% of the profit accrued from its stake in the Agbami oil field of the Niger Delta.

Abebe was involved in helping the company secure blocks three oil blocks in Nigeria some 20 years ago through arrangements with British Petroleum (LSE: BP, NYSE: BP), which has since exited the country. According to the ruling, Statoil inherited the agreements between BP and Abebe. The Agbami field was discovered in 1998 and it began production in 2010. Statoil holds just over 20% stake in the field that was producing near its estimated peak production of 250 000 barrels per day last year. It has estimated reserves of 900 million boe.

Statoil maintains that it believes the case has no merit and plans to appeal to the High Court. Its earnings from Nigerian operations have been frozen in an escrow account until the case is solved. Abebe said he is in no hurry to get the money and does not mind his profits growing in an account for another 3-4 years. Analysts’ have calculated that the compensation in question should be above 1 billion NOK, while Abebe himself thinks it could be ten times that much.

Aker Solutions wins Statoil early stage contract awards

Aker Solutions (OSE: AKSO) got the contract from Statoil (OSE: STL, NYSE: STO) it had been hoping for, early phase studies for all of its recent major discoveries in the Norwegian Continental Shelf, the Shrgard and Havis fields in the Barents Sea and the Johan Sverdrup (Aldous/Avaldsnes) discovery in the North Sea. The contract values are not disclosed but they are clearly important and were a priority for this year.

Aker Solutions will be one of several vendors performing a concept study for the Skrugard and Havis fields. A screening of potential scope will be done on behalf of Statoil. The company feels that Barents Sea development with floating installations in a harsh environment belongs to its core competence and it is continuously increasing its presence in Northern Norway. On the Johan Sverdrup Aker Solutions will do a feasibility and screening study.

High oil prices help Statoil in Q1 2012

Statoil’s (OSE: STL, NYSE: STO) total revenues grew almost 30% to 195.4 billion NOK behind strong oil and gas prices and an 11% increase in production volumes. After total operating expenses of 137.5 billion are deducted, net operating income comes in at 57.9 billion, a 14% increase. The adjusted earnings of 59.2 billion is the highest quarterly number to date. Cash flow from operating activities was above 70 billion NOK.

After the effective tax rate of 71.6%, adjusted earnings print at 16.8 billion NOK, up from 11.9 billion. Reported net income of 15.4 billion is slightly lower than a year ago and translates to earnings per share of 4.75 NOK. New fields and production ramp up continues. Out of the 12 completed exploration wells during the quarter, eight were discoveries. The guidance for 2012 is maintained and the stock has responded with a small plus.

Statoil & Rosneft to jointly explore frontier assets

Statoil (OSE:STL, NYSE:STO) and Rosneft (MICEX-RTS:ROSN LSE: ROSN) have agreed to jointly explore offshore areas close to the recently agreed upon marine border of Norway and Russia in the Barents Sea and the Sea of Okhotsk, Statoil said in a release this Weekend. The two firms will set up joint ventures for four different licenses that cover an area of more than 100 000 square kilometres with Statoil holding 1/3th stake in each.

Statoil will be funding the initial exploration. Rosneft will also have the right to acquire an interest in some Statoil projects in the North Sea and Norwegian side of the Barents Sea. The cooperation agreement was signed this weekend this weekend in the presence of Russia’s returning President Vladimir Putin. It follows similar deals that Rosneft has signed with certain other international oil companies. Russian government holds three quarters of the shares in Rosneft while Norwegian government owns around a third of Statoil

Aker Solutions has started the week fast

Aker Solutions (OSE: AKSO) continued its big move up this week. This comes on the heels of a major announcement on Tuesday noting that the company has entered into long-term heavy well intervention and light drilling services on the NCS with Statoil (OSE: STL, NYSE: STO). This 8 year contract contains options for three additional two-year periods and the initial period is valued around 1.9 billion USD.

The works will be performed from a new build Category B well intervention rig which aims to fill the gap between conventional drilling rigs and light well intervention units. The company is calling this vessel based intervention service concept a game-changer. Statoil feels that this can improve well recovery rates. The rig is expected to be in service by H2 2015 and the company is currently negotiating EPC contract to build it.

On Monday Aker Solutions said it had received a jack-up drilling equipment contract from Yantai CIMC Raffles Offshore Ltd to supply a complete drilling equipment package for a new rig. The contract value wasn’t disclosed. There are options for three more of these 2000E jack-up designs.

Alimentation Couch-Tard makes a bid for Statoil Fuel & Retail

Alimentation Couch-Tard (TSX: ATD.A, ATD.B) is making a recommended cash offer to acquire 100% of the shares in Statoil Fuel & Retail (OSE: SFR). Couch-Tard bids 53 NOK per share, valuing the Scandinavian convenience and fuel retailer at 15.9 billion NOK. The offer represents a premium of 52.5% on yesterday’s closing price.

Majority owner Statoil (OSE: STL, NYSE: STO) has accepted the offer. All the members of the Board of Directors also intend to accept the offer. The Offer period is expected to start soon. Couch-Tard is a major convenience store operator and many of its stores ore integrated with a petroleum company.

Novo overtakes Statoil as exchanges prepare for Easter

Nordic exchanges are heading for Easter holidays. Oslo already closed earlier today and Copenhagen will join it on the sidelines tomorrow. Stockholm will be open for half a day and only Helsinki has a normal trading day. Investors have been taking profits and a wobbly debt auction from Spain escalated the slide on Wednesday.

Generally there were very few company specific news. One tidbit is that Novo Nordisk has overtaken Statoil as the largest listed company in the Nordic countries, with both hovering around 65 billion Euro market cap. Various subsidy cuts across the world have really hit solar (Renewable Energy Corporation) and wind (Vestas, which also has had to digest other negative news) sectors.

Lundin Petroleum AB jumps on appraisal well data

Worries that Lundin Petroleum AB (OMX: LUPE) might be about to lower the resource estimates of a portion of Johan Sverdrup any time subsided today after the firm announced data from appraisal well 16/2-11 in PL501 license. The well encountered 54 metre gross oil column of good reservoir properties in Upper and Middle Jurassic sandstone at predicted depth.

Production test in Middle Jurassic resulted in flow rates of over 2700 barrels of oil per day. The work will now shift to investigate lateral thickness and property variations as well as the establishments of an oil water contact to estimate possibility of a deeper oil-water contact in this area.

The company has now decided to delay the release of updated resources estimates most likely until the completion of 2012 appraisal program. Lundin Petroleum gained 7% for the day. Partners Statoil and Maersk were largely unaffected by the news in today’s trading

Statoil notes increased Northern Norway focus, small oil discovery

Statoil (OSE:STL, NYSE:STO) is intending to make good of the plans to establish a new operation in Northern. Activities in the region are due to increase considerably with Norne and Snøhvit fields, already in operation, Aasta Hansteen field decision coming soon and further activities on exploration in the new targets in the Barents and the north-eastern Norwegian Sea. The base will be in Harstad, Troms county.

On Friday Statoil (49.3%) and partners Petoro (33.6%) plus Total, ExxonMobil and ConocoPhillips with small stakes could rejoice a small but potentially very economical discovery in the North Sea. Drilling in license PL053 n the Oseberg Area proved on oil column of 12 metres with estimated volume of 12-18 million barrels of recoverable oil equivalents. The discovery is a good candidate to be connected to Oseberg production facilities.

The discovery in prospect called Crimp was a secondary drilling target for the well with Crux high impact gas prospect being the first one. Crux prospect did not contain hydrocarbons. The hypothesis was projecting up to 250 mboe as a high risk play assuming a gas-filled structure underlying the Oseberg field, so that part of the news was obviously a disappointment.