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Statoil ASA (ADR) (STO), Transocean LTD (RIG), Tidewater Inc. (TDW): Exploring Opportunities in Offshore Norway

Over the next five years, the offshore drilling services market is expected to grow from $73.1 billion in 2013 to $121.1 billion by 2018. Within this market, Norway is expected to spend $220 billion, second only to Brazil’s $250 billion on the development of their offshore off reserves. Three companies that will are well positioned to take capitalize on this spending are: Statoil ASA (ADR) (NYSE:STO), Transocean LTD (NYSE:RIG) and Tidewater Inc. (NYSE:TDW).

Map sourced by (Aker Solutions)

Norway has three substantial bodies of water to access offshore oil and gas developments. As the chart below indicates the North Sea, Norwegian Sea, and Barents Sea offer vast discovered and undiscovered resources. Norway recently raised its estimate for undiscovered oil and gas by 31% to 8 billion barrels of oil equivalent in the Barents Sea while the Norwegian Petroleum Directorate says  it has increased its estimates for undiscovered recoverable oil and gas resources offshore Norway by 16% to 18.74 billion barrels of oil equivalent. This estimate is up from its last estimate made in 2011 of 16.17 billion boe and does not include some reserves in the Norwegian Barents Sea.

 

Chart sourced by (Statoil)

The Barents Sea
Norway and Russia recently resolved a 40-year-old dispute over how to divide the Barents Sea and part of the Arctic Ocean. Since then, the Norwegian government has decided to increase its production in this region. Statoil ASA (ADR) (NYSE:STO), which operates over 80% of Norway’s oil and natural gas production, has stated they will spend $13.8 billion USD with Petoro As and Eni  to develop the Skrugard and Havis reserves in the Norwegian Barents Sea.

 

Map sourced by (Statoil)

The Norwegian Sea
Substantial advancements are being made on Aasta Hansteen or formerly Luva gas fields off the northwest coast of Norway. These fields are expected to drive the development of deep-water production in the Norwegian Sea. According to Statoil ASA (ADR) (NYSE:STO), which is a deep-water pioneer in the Norwegian Sea, this development may be the first to have a Spar platform on the Norwegian continental shelf (NCS). Statoil Senior vice president for NCS field development Ivar Aasheim states, “This development may represent the start of deep-water production in the Norwegian Sea, and it will enable the tie-in of other discoveries in the same area.”

The North Sea
Statoil ASA (ADR) (NYSE:STO) and the Norwegian government are looking to increase production in the North Sea over the next three to five years. Focusing on the Greater Utsira region and further investigating the Kin Lear area, Statoil ASA (ADR) (NYSE:STO) expects production in the north sea to increase by ~70 mboe/d over the next few years.

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