Statoil Projects Over 50% Rise In U.S Offshore Production
Zacks Investment Research | May 18, 2017 09:57PM ET
Integrated energy playerStatoil (OL:STL) ASA (NYSE:STO) recently declared that it anticipates net production from offshore operation in the U.S Gulf of Mexico to increase by more than 50% by 2020.
By the end of this decade, the production is likely to surge from the current output of 80,000 barrels of oil equivalent per day (BOE/D) to 125,000 BOE/D. Reduction in breakeven expenses from the offshore operations primarily led to the higher output expectation. Earlier during 2014, the company’s offshore projects would have been unprofitable had oil traded below $70 per barrel mark. However, Statoil’s average breakeven cost has now been reduced to $40 per barrel, and even $27 per barrel for some developments.
We note that Statoil’s efficient operations – following re-engineering and easing designs – primarily led to the massive reduction in offshore breakeven costs. Significant discount by the oilfield service providers on rigs and equipment also supported the lower cost to some extent.
Investors should know that during 2004 Statoil started operating in the U.S. Gulf of Mexico. Presently, the company has interests in six oil and gas producing resources in the region. The properties comprise Stampede deepwater oil and gas field, which is operated by Hess Corporation (NYSE:HES) , and Big Foot development of energy giant Chevron Corporation (NYSE:CVX) .
Headquartered in Stavanger, Norway, Statoil’s business includes upstream, midstream and downstream operations. Statoil’s share pricing chart shows significant strength as the stock has gained 10.2% over the last one year against 5.3% increase by the Zacks categorized Zacks Investment Research
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