Statoil ASA, Norway’s biggest oil and gas producer, will be more discriminating in picking exploration targets to reduce risk and control spending.
Statoil will concentrate on areas where it has made recent discoveries including Angola, Tanzania, Brazil, the Gulf of Mexico, Canada and Norway, Head of Exploration Tim Dodson said yesterday. It will probably exit countries such as Mozambique.
“We’ll be much more selective in taking on other new opportunities,” Dodson said in Oslo. “We can choose what we move forward with, and of course we will be more selective on that because we want to manage our capital investments.”
Statoil’s exploration resulted in 1.5 billion barrels of new resources last year and almost 900 million barrels so far in 2013, the most of any energy producer in terms of conventional output, company data show. Statoil also has sold Norwegian assets and borrowed money to fund rising spending and dividends amid escalating costs for the industry.
Investment in exploration next year will be similar to that in 2013, when the company plans to spend $3.75 billion on about 60 wells, according to Dodson, who said that quantity may fall in 2014. Statoil previously forecast average capital expenditure of $21 billion a year from 2013 to 2016; the figure this year is more like $19 billion.
As many as 25 of next year’s wells will be drilled off Norway, according to the company, which is 67 percent-owned by the country’s government and based in Stavanger.
Statoil will also operate two wells off Angola next year, two off the Faroe Islands and one or two in the U.S. Gulf of Mexico, Dodson said. It will drill six off Tanzania, international exploration chief Nick Maden said yesterday.
As Statoil hones its exploration targets, it may leave areas where wells have proven unsuccessful. The East African country of Mozambique, where it drilled a dry well this year, “could be an exit candidate,” Dodson said.
“There’s not really any point in loading up and loading up with lots of exploration, especially high-risk stuff, when you basically have got good stuff to follow up on and only a certain amount of capital available,” he said. “It’s a balancing game between how quick do you grow against how much value do you create at one point in time. We want to make sure that we’re financially robust to go through any kind of cycle.”
One area of focus will be eastern Canada, where Statoil is looking at additional drilling near its offshore Bay du Nord discovery from 2015. “There’s plenty more to be done in that area, there’s a lot of new structures, a lot of new prospects,” Dodson said.
Statoil said last month it’s not “wedded” to its goal of increasing production by a quarter to 2.5 million barrels of oil equivalent a day by the end of the decade.