Statoil’s Third Oil Find Off Canada May Exceed Estimate

Statoil ASA (STL) said its third find off eastern Canada, containing enough oil to make the trio of discoveries commercially viable, may hold more resources than estimated because the area includes further prospects.

“There are other parts of the structure which are regarded as prospective and not included in the volumes we quoted,” Head of Exploration Tim Dodson said today by phone from Stavanger, Norway, where Statoil is based. “And there are other prospects over and beyond that in the license.”

The company said earlier today that its Bay du Nord discovery in Canada’s Flemish Pass Basin holds 300 million to 600 million barrels of recoverable oil. A sidetrack well this week confirmed that the find, about 500 kilometers (310 miles) off Newfoundland and Labrador, is “high-impact,” Statoil said.

Statoil, 67 percent-owned by the Norwegian government, is the operator of Bay du Nord, Mizzen and Harpoon with a 65 percent stake, while Husky Energy Inc. (HSE) has 35 percent.

Husky, based in Calgary, gained 4.2 percent to C$30.30 at 12:52 p.m. in Toronto, after earlier rising the most intraday since April 24. Statoil rose 0.5 percent to 137.50 kroner at the close of trading in Oslo.

The discovery, first announced in August, adds volumes to the nearby Mizzen and Harpoon fields. While output won’t start before 2020, the Bay du Nord well “brings us one step closer to becoming a producing operator in the area,” Dodson said.

Most Successful

Statoil, which also has reported discoveries off Tanzania in the past year, is expanding abroad to compensate for falling crude production from aging North Sea fields. With more than 850 million barrels of oil equivalent found in 2013, the company is the most successful explorer for conventional resources, ahead of Eni SpA (ENI) with 600 million barrels, according to Statoil.

There’s a “distinct possibility” that the three Flemish Pass discoveries will be developed together because Harpoon and Mizzen are located within 20 kilometers of Bay du Nord, Dodson said. With the oil lying under 1,100 meters of water, subsea extraction will require “some kind of floating installation,” he said, declining to estimate the necessary investment.

While Statoil has yet to provide resource estimates for Harpoon, found in June, it’s more similar in size to Mizzen, which holds 100 million to 200 million barrels, than to Bay du Nord. Harpoon’s oil is the same light kind as at Bay du Nord and is “obviously sourced from the same basin,” Dodson said.

The progress of further drilling by Statoil, which plans more seismic studies and exploration in the Flemish Pass Basin in the next few years, is dependent on the acquisition of rigs. Bay du Nord will probably require a further two wells, according to Dodson.

“Rig availability is an issue, this is not a particularly active area,” he said. “We need to have the right kind of rigs to drill in this kind of environment.”

To contact the reporter on this story: Mikael Holter in Oslo at mholter2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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